All articles tagged with #credit losses
JPMorgan Chase posted 2025 earnings of $57 billion, down from 2024’s record $59 billion, due to lower interest rates squeezing net interest income, higher reserves for loan losses, and costs from acquiring Apple’s branded credit card; fourth-quarter profit fell 7% to $13 billion, while CEO Jamie Dimon signaled potential long-term benefits from deregulation and policy as headwinds persist.
Jamie Dimon, CEO of JPMorgan Chase, highlighted concerns over a weakening job market and persistent inflation amid slightly higher credit loss provisions, citing ongoing geopolitical and economic uncertainties despite the US economy's overall resilience.
HSBC's first-half profit fell 26% to $15.8 billion due to impairments from its stake in China's Bank of Communications and exposure to Hong Kong real estate, with the bank warning of potential future profit misses amid US trade tensions and ongoing restructuring efforts.
Swiss wealth manager Julius Baer reported significant net credit losses related to its exposure to real estate group Signa Holding, leading to CEO Philipp Rickenbacher stepping down and the announcement of 250 job cuts. The bank will exit its private debt businesses and focus on mortgage lending and specialized personal lending loans. Despite the challenges, shares rose 10% on the news. The bank's net profit for the full-year 2023 was down 52%, and assets under management grew by 1%.
American Express reported third-quarter profit that exceeded expectations, driven by strong spending from its affluent customer base. Despite concerns about an economic downturn, AmEx has managed to mitigate the impact of inflation and rate hikes. The company increased provisions for credit losses due to the higher likelihood of consumer defaults, but net write-off and delinquency rates remained below pre-pandemic levels. AmEx's CFO noted that demand for their products and services is coming from Gen Zs and Millennials, and the resumption of student loan repayments has not affected spending patterns. The company's earnings per share and revenue for the full year are expected to be in line with prior forecasts.
Wells Fargo CFO, Mike Santomassimo, expects an upside in net interest income going ahead, despite losses in office loans. The bank had earlier issued guidance for a 10% higher net interest income this year, more than the full-year 2022 level of $45 billion. The San Francisco-based bank also warned that there could be some onetime expenses by the end of the year in terms of severance. Regulators have prohibited the fourth-largest U.S. bank from increasing its assets after a series of scandals over how it treated customers, which has curtailed balance sheet growth and increased regulatory expenses.
BMO's quarterly earnings report showed a significant increase in provisions for credit losses and allowances for credit provisions in the transportation sector, which is considered a strong indicator of the health of fleets. The data suggests that trucking companies were hitting their lines of credit to a greater degree in the second quarter. Gross impaired loans also rose, but were still below peak levels seen in 2020. The weak trucking market has finally caught up to BMO's earnings report, with provisions for credit losses rising to CA$18 million from $6 million in the prior quarter.
Harley-Davidson's credit losses in Q1 were partly due to a shortage of repossession agents, as the repossession industry sees an uptick in demand amid more Americans struggling to afford their car payments. The shortage combined with a decline in retail bike values contributed to realized credit losses of about $52.6 million. Many repossession agents left the industry during the pandemic when business largely dried up due to stimulus measures. The company is making enhancements to its repossession strategy and expects a seasonal recovery in credit losses to reduce the loss rate in the coming quarters.
Morgan Stanley's stock remained flat despite beating Q1 earnings projections, as the bank built up its provision for credit losses to protect against losses in commercial real estate and other business lines. The bank's profit fell 19% due to a scarcity of IPOs, M&A deals, and capital-raising activities. Morgan Stanley added $110 billion in new assets in its wealth-management unit, while investment-banking activity remained "constrained." The bank reduced its exposure to commercial real estate in its portfolio during the past 12 months.
US banks, including Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup, have reported that consumers are starting to fall behind on their credit card and loan payments as the economy softens, although delinquency levels are still modest. While profits have beaten analyst forecasts, industry chiefs warn that the strength will tail off this year as a recession looms and customer delinquencies climb. As large and medium-sized lenders become more conservative in underwriting, their net charge offs will probably peak in several quarters, leading to slower loan growth in 2023 and 2024.
US banks including Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup have reported that consumers are starting to fall behind on their credit card and loan payments as the economy softens, although delinquency levels are still modest. The banks have set aside billions of dollars to cover potential soured loans. While delinquencies and net charge-offs have slowly risen as expected, consumers and businesses generally remain strong, according to industry chiefs. However, worsening economic conditions could lead to credit deterioration throughout 2023 and 2024 with losses eventually surpassing pre-pandemic levels given an oncoming recession.
US banks, including JPMorgan Chase, Wells Fargo, Citigroup, and PNC, reported surging revenue and profits in Q1 2023, with executives assuring investors that the worst of the financial crisis was over. However, the industry still faces challenges, including the effect of higher interest rates on net interest income, which could begin to fall across the industry as smaller institutions pay more aggressively for deposits. Additionally, credit conditions could worsen, with JPMorgan and Wells Fargo increasing their provisions for credit losses, and Citigroup's CEO warning that recent industry turmoil could cause credit to contract, potentially leading to a shallow recession.
Wells Fargo reported a Q1 net income of nearly $5 billion, up over 30% from a year ago, due to higher interest rates. The bank's revenue of $20.73 billion beat Refinitiv estimates of $20.08 billion. However, the bank set aside $1.2 billion for credit losses, including a $643 million increase for potential losses related to commercial real estate, credit card, and auto loans. Noninterest income decreased 13% in the quarter, driven by lower results in its affiliated venture capital and private equity businesses as well as a decline in mortgage banking income.