Major US Banks Declare $3.5 Billion Loss on Delinquent Debts

Two of the largest banks in the US, JPMorgan Chase and Wells Fargo, are facing significant losses due to delinquent debts that customers are unable to pay back. JPMorgan Chase reported a staggering $2.2 billion in net charge-offs in the second quarter of the year, marking a $200 million increase from the previous quarter and an $800 million increase from the same period in 2023. Meanwhile, Wells Fargo saw its net charge-offs surge from $764 billion in Q2 of 2023 to $1.3 billion last quarter, a 70% increase.

The chief financial officer of Wells Fargo, Michael Santomassimo, highlighted the impact of inflation on customers, stating that many are struggling as their credit card balances rise and savings dwindle. He noted that customers on the lower end of the wealth or income spectrum are facing more challenges compared to those on the higher end.

In addition to the charge-offs, JPMorgan also declared an additional $500 million in losses from failing mortgage investments. US banks have been raising concerns about growing credit card balances and issues in the commercial real estate industry since last year.

Despite the challenges, Wells Fargo reported a Q2 profit of $4.9 billion, while JPMorgan Chase reported a quarterly profit of $13.1 billion, with its stock hovering near its all-time high. However, Wells Fargo’s shares tumbled 6% on Friday after net interest income fell short of estimates.

The news of these losses comes as a reminder of the financial struggles faced by many individuals and the impact of economic factors on their ability to meet their financial obligations.