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US banks face $320bn in loan losses in 2020

by LLB Finance Reporter
22nd Oct 20 2:52 pm

The top 5 US banks faced potential loan losses of up to $104 billion at the end of H1 2020. That was the first time in a decade that the figure had crossed the $100 billion mark.

According to the research data analyzed and published by ComprarAcciones.com the total deferred loans for four of these banks at the time totaled $151.5 billion.

US banks face $320bn in loan losses in 2020

During Q2 2020, Bank of America set aside $5 billion, bringing its total loan loss provisions to almost $20 billion. Also, its profits during the period dropped from $7.3 billion to $3.5 billion year-over-year (YoY).

Citigroup allocated $5.6 billion for the same purpose in Q2 amid a 73% profit decline. Comparatively, it had set aside $7 billion in Q1 2020 according to Statista.

On the other hand, JP Morgan Chase set aside $10.5 billion in Q2, adding to $8.3 billion that it had set aside in Q1 2020. Its profits also dropped by 51% during Q2.

According to S&P Global, US Bancorp’s total credit allowance at the end of Q2 was $7.89 billion. It had set aside $1 billion in Q1 and $1.74 billion in Q2. For Wells Fargo, the total was $20.4 billion, following a $4 billion allocation in Q1 and $9.6 billion in Q2.

A study from Citigroup reveals that the top 15 US banks had set aside $76 billion in loan loss provisions as of August 2020. Meanwhile, the top 32 European banks had set aside €56 billion. The $139 billion total was the highest on record since 2009 when the banks set aside a total of $186 billion for loan loss provisions.

According to Accenture, US banks face up to $320 billion in loan losses by the end of 2020. European banks, on the other hand, could lose up to $460 billion.

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