WFC - US Banking Giants Brace For Fourth-Quarter Earnings Amid Mounting Bad Debts Interest Rate Pressure | Benzinga
As the U.S.’s prominent banking institutions prepare to report their fourth-quarter earnings, a significant surge in bad debts poses a risk to the growing investor confidence in the sector.
What Happened: The Financial Times reported on Monday that non-performing loans at the four largest U.S. banks are estimated to have ballooned to a combined $24.4 billion in the last quarter of 2023, an increase of nearly $6 billion from the end of 2022.
Analysts are projecting a decline in bank earnings for the last quarter of 2023, partly influenced by these unpaid loans and the lingering effects of higher interest rates, which have driven up deposit costs.
Additionally, several big banks are expected to incur a one-time charge by the end of the year, as they have agreed to a special assessment imposed by the Federal Deposit Insurance Corporation to recoup the $18.5 billion that last year’s failures of Silicon Valley Bank and Signature cost the regulator’s insurance fund.
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The banks, including JPMorgan Chase & Co. ...