Two of the largest banks in the US are declaring a loss on a whopping $3.5 billion in debts that customers can’t pay back.
JPMorgan Chase says its net charge-offs, which are delinquent debts that banks do not expect to receive, hit $2.2 billion in the second quarter of the year.
That’s a $200 million increase from the previous quarter and an $800 million increase from Q2 of 2023.
Meanwhile, Wells Fargo says its net charge-offs surged from $764 million in Q2 of 2023 to $1.3 billion last quarter – a 70% increase.
Although the pace of inflation has reduced, Wells Fargo’s chief financial officer Michael Santomassimo says many customers are clearly struggling as their credit card balances rise and savings dwindle, reports the New York Times.
“[Inflation is] still cumulatively having a bit impact. The folks on the lower end of the wealth or income spectrum are struggling more than folks that are on the higher end.”
In addition to its charge-offs, JPMorgan declared an additional $500 million in losses from failing mortgage investments.
US banks have been sounding the alarm on their customers’ growing credit card balances and issues in the commercial real estate industry since last year.
In its new report, Wells Fargo says it earned a Q2 profit of $4.9 billion, although the bank’s shares tumbled 6% on Friday after net interest income fell short of estimates.
JPMorgan Chase reported a quarterly profit of $13.1 billion as its stock hovers near its all-time high.