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Banks earnings lower due to the pandemic

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
A despicable first quarter for the US banking sector

The pandemic's effects don't cease to show up and have a significant impact on the financial situation. 

The newest report from the Federal Insurance Corporation states that due to a collapsing economic activity, the lenders wrote off the mandatory debt payments and saved up billions of dollars to protect themselves from future losses. Almost 15% of US bank loans have been categorized as delinquent.

The US banks allocated $38.8 billion to protect themselves from possible future loan losses, a 280% increase compared to the same time last year.

Commercial banks and savings institutions reported first quarter earnings of $18.5 billion, a decrease of 69.6% compared to last year. The community banks had a net income of $4.8 billion. Banks that have assets worth over $10 billion accounted for 80% of the earnings, with top names such as JP Morgan, Bank of America, Wells Fargo, and Citigroup. The number of institutions that reported net losses increased by 7.3% in the past three months – the most significant increase since 2010.

On the other hand, the capital positions of banks increased by 8.5% to $15.8 trillion. Loans and leases went up 4.2% to $11 trillion. 

The FDIC report had an impact over the most important banks: JP Morgan opened lower by more than 0.50%, while Bank of America and Citigroup went down over 0.60% each. Wells Fargo slid 1.10%. 

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Sources: nasdaq.com, reuters.com, finance.yahoo.com


This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.