The biggest US banks are poised to write off more bad loans than they have since the early days of the pandemic. Higher-for-longer interest rates and lingering fears in some quarters of an economic downturn, despite data pointing the other way, are putting borrowers in a bind. JPMorgan, Citigroup and Wells Fargo, which report third-quarter results Friday, will join Bank of America—which reports Tuesday—in posting roughly $5.3 billion in combined third-quarter net charge-offs, the highest for the group since the second quarter of 2020, according to data compiled by Bloomberg.
The figure is more than twice as high as a year earlier, as lenders contend with consumers struggling to keep up with rising interest rates and a commercial real estate industry grappling with work-from-home and its fallout. Citigroup Chief Executive Officer Jane Fraser said last month her bank is seeing signs of weakness in consumers with low credit scores, who have had their savings eaten away by inflation. Still, she said the vast majority have been able to handle rate increases.
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