Goldman Sachs, JP Morgan, Wells Fargo Among Major US Banks To Write Off $5B In Loans: Report

The six largest banks in the US, namely JP Morgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS), are projected to write off a combined $5 billion in defaulted loans in the second quarter of this year.

This is according to average estimates compiled by bank analysts. In addition, these banks are expected to set aside an additional estimated $7.6 billion to cover potentially bad loans, Financial Times reports.

Impact of Rising Interest Rates

While higher interest rates have led to increased lending and investment income, they have also started to reveal their negative effects. The pressure on borrowers is mounting after three years of relatively low defaults, largely due to pandemic-era stimulus cash and other government assistance.

See Also: Recession Is Not Completely Off The Table Despite Healthy Economy: Janet Yellen

Loan Losses and Provisions

The predicted write-offs and provisions for potential bad loans represent a significant increase from the same quarter a year ago. However, they remain below the hits big banks took at the pandemic’s beginning when charge-offs and provisions peaked.

Read Next: We Are On A Golden Path To Lower Inflation Without Recession: Fed’s Goolsbee Says

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