The pandemic slammed results released Tuesday by three big U.S. banks. JPMorgan Chase and Wells Fargo are each setting aside roughly $10 billion in reserves and Citigroup nearly $6 billion to cover potential loan losses due to the coronavirus crisis.
The scale of expected loan defaults is seen as a gauge of the health of the U.S. economy.
JPMorgan, the largest U.S. bank, saw its quarterly profit plunge by more than half. But that was less than Wall Street had feared, so shares rose in early trading Tuesday.
CEO Jamie Dimon said, “Despite some recent positive macroeconomic data and significant, decisive government action, we still face much uncertainty regarding the future path of the economy.”
Citigroup’s income plummeted even more - nearly 73%. Citi, the U.S.’ third largest credit card issuer, is vulnerable to any jump in delinquencies which tend to track increases in unemployment. The bank has so far relaxed repayment requirements on 6% of its card balances.
And Wells Fargo swung from a profit to a loss of nearly two-and-a-half billion dollars. The mortgage lender also cut its third quarter dividend. Even before the pandemic, the bank had been struggling to recover from scandals stemming from its sales practices.
Shares of Citi and Wells declined in early trading.