Largest US Banks Expect Billions in Loan Losses, Profits Plunge

Several of the largest U.S. banks have set aside billions of dollars in reserves as they expect massive losses from loan defaults, sending their profits nosediving. Wells Fargo’s first-quarter earnings fell a whopping 90% while JPMorgan Chase’s profit dropped 70%. Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley also saw their profits plunge.

Flood of Bad Loans Expected, Profits Plunge for Wells Fargo and JPMorgan

U.S. banks released their Q1 2020 results last week as recession looms and the global pandemic intensifies. Wells Fargo, one of the largest banks in the country, set aside a $3.1 billion reserve to cover loan losses expected during this unprecedented economic crisis. The bank then reported a major earnings decline, with profit plunging 89% to $653 million for the quarter. Its earnings per share fell from $1.20 from the previous year to only 1 cent. CEO Charlie Scharf said:

We have entered into a world we have never seen before … There are many unknowns.