Banks Double Loan Loss Reserves ‘Everybody Is Struggling’

Mish

The 4 biggest US banks nearly doubled amount set aside to cover soured corporate loans.

Everybody Is, Bluntly, Struggling’ said Bill Demchak, CEO of PNC Financial Services Group on an earnings call.

CEO, CFO, and Analysts Quotes

  • PNC CEO: ‘Everybody Is, Bluntly, Struggling’ said Bill Demchak, CEO of PNC Financial Services Group on an earnings call. “The generic corporate client we talk to, who’s otherwise open and doing business, is almost without exception down from what they would have expected going into the year and down from where they were last year.”
  • Citigroup CEO: “I don’t think anybody should leave any bank earnings call this quarter simply feeling like the worst is absolutely behind us and it’s a rosy path ahead,” Citigroup Inc. Chief Executive Michael Corbattold analysts Tuesday. “I don’t want to be pessimistic…I want to be a realist.
  • JPMorgan CFO:  “In the first quarter, when we were really looking at a deep but short-lived downturn, we were really very much focused on most impacted sectors,” said JPMorgan Chief Financial Officer Jennifer Piepszak. “Now that we’re looking at a more protracted downturn, we’re reserved for a much more broad-based impact across sectors.”
  • JPMorgan CEO: “We cannot forecast the future,” JPMorgan CEO James Dimon told analysts. “We don’t know. The word unprecedented is rarely used properly. This time it’s being used properly.”
  • Wells Fargo Analyst: “People are scared, and they are responding by both banking their cash and basically prefunding their borrowing needs as much as they can,” Wells Fargo bank analyst Mike Mayo said.

Things are poised to get worse as reopening goes in reverse in the south. And things were not improving fast in the first place.

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Mish

Comments (20)
No. 1-14
MiTurn
MiTurn

Ripple effect. Nothing good here.

The next couple quarters are going to be alarming.

Keep up the good work, Mish.

Anda
Anda

Apart from everyone struggling, well 17 bn total listed above is not that much nowadays. Take EU, they are shuffling in circles around 750 bn trying to make out there appears oversight by at least one prudent nation that makes the whole show seem virtuous. Clearly private banking is fully free market set and has to profit, sorry compete against spending by those they fund, erm something like that, but I'm sure everyone will come out ahead and even those who lose their business will be supported until they learn how to code.

tokidoki
tokidoki

Dow 50 billion.

Realist
Realist

There will be very few US businesses that will do well until Trump does something to control the pandemic that he has completely mismanaged.

Instead he is attempting to eliminate funding for testing and tracing.

It's like he deliberately wants to infect and kill as many Americans as he can. It's MAD!

Make Americans Dead.

They should put Trump on the cover of MAD magazine. What, me worry?

Tony Bennett
Tony Bennett

Banks Double Loan Loss Reserves ‘Everybody Is Struggling’

...

Say what you want about Jamie Dimon, but he is smart (for a banker). He knew the ride about over pre covid. If you check JPM's balance sheet, in 2019 loan total actually declined (around $25 billion) while treasuries (safety) grew over $80 billion.

The losses are JUST beginning. It will take several years to work them out.

Six000mileyear
Six000mileyear

Fiddling with interest rates won't fix this problem. Either will turning the Federal Reserve into a bad bank where high risk loans go to default. A clean slate with borrowing limits by individuals and a prohibition on duration mismatch will go a long way to rebuild the financial system.

AbeFroman
AbeFroman

I know I’m about 50 years too late but it really seems like this dual mandate was probably a bad idea 😀

numike
numike

America Should Prepare for a Double Pandemic
COVID-19 has steamrolled the country. What happens if another pandemic starts before this one is over? https://www.theatlantic.com/health/archive/2020/07/double-pandemic-covid-flu/614152/

numike
numike

This is a big fucking deal. If I would not be excommunicated from the world of science, I would call this an evil virus, but I can’t do that because I can’t impugn motives to it. But if I could, I would call it that. It’s certainly pernicious. This is the worst pandemic in our lifetime. And it is the first time we have had a pandemic in the United States in which we have had such a total, abysmal failure of our federal government. https://www.wired.com/story/larry-brilliant-on-how-well-are-we-fighting-covid-19/

njbr
njbr

Hong Kong is shutting down again, they've closed their Disneyland, work-from-home order for civil servants, mandatory mask wearing, extending limits on restaurants, building more quarantine facilities, distance learning, etc.

This ain't over yet...more losses will arrive.

Casual_Observer
Casual_Observer

Trump wants to cut funding for covid testing and support. This would all be comical if not for real lives being affected. Infants are now testing positive for covid in large numbers in Nueces county in Texas.

Bam_Man
Bam_Man

The entire banking sector will have to be nationalized.
Uncle Scam will be your banker, and the IRS his collection agency.
Cannot be avoided at this point.

simb555
simb555

good economic article (without Trump ) that has relevance to what is going on. This is what we read you for. Read CNN or MSNBC or just watch TV news is Trump bashing is your thing.


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