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
