JPMorgan Chase and Wells Fargo suffer $3.5 billion in losses as US banks report massive rise in bad debt

Two of the largest banks in the US are reporting losses on as much as $3.5 billion in debt that customers cannot repay.

Net write-offs, which represent past-due debt that banks do not expect to recover, totaled $2.2 billion in the second quarter of the year, according to JPMorgan Chase.

That’s an increase of $200 million from the previous quarter and an increase of $800 million from the second quarter of 2023.

Wells Fargo, meanwhile, reported that net write-downs rose from $764 billion in the second quarter of 2023 to $1.3 billion in the previous quarter — a 70% increase.

While inflation has declined, Michael Santomassimo, Wells Fargo’s chief financial officer, told The New York Times that many customers are clearly struggling as their credit card bills rise and their savings shrink.

“[Inflation is] cumulatively still have some impact. The people at the bottom of the wealth or income spectrum have it harder than the people at the top.”

In addition to the writedowns, JPMorgan reported another $500 million in losses from failed mortgage investments.

Since last year, American banks have been warning about their customers’ growing credit card debt and problems in the commercial real estate sector.

Wells Fargo reported a second-quarter profit of $4.9 billion in its new earnings report, though the bank’s shares fell 6% on Friday after net interest income came in below expectations.

JPMorgan Chase reported quarterly profit of $13.1 billion as its stock price hovers near an all-time high.

Don’t miss a thing – Subscribe to receive email notifications straight to your inbox

Check price action

follow us on XFacebook and Telegram

Surf the daily Hodl mix