Two of the largest US banks are announcing losses due to a whopping $3.5 billion in debts that customers cannot repay.
JPMorgan Chase reports that its net charge-offs, which represent past-due debt that banks don't expect to collect, reached $2.2 billion in the second quarter of the year.
This is an increase of $200 million from the previous quarter and an increase of $800 million from the second quarter of 2023.
Meanwhile, Wells Fargo reported that its net write-downs rose from $764 billion in the second quarter of 2023 to $1.3 billion last quarter, an increase of 70%.
Although the rate of inflation has dropped, Wells Fargo CFO Michael Santomassimo told the New York Times that many customers are clearly struggling as their credit card balances rise and savings dwindle.
“[Inflation] is still having some impact in the aggregate. People with low levels of wealth or income experience more difficulties than those at higher levels.”
In addition to the write-offs, JPMorgan announced an additional $500 million in losses due to failed mortgage investments.
U.S. banks have been sounding the alarm since last year about rising credit card balances among their customers and problems in the commercial real estate sector.
In its new report, Wells Fargo said its second-quarter profit was $4.9 billion, although the bank's shares fell 6% on Friday after net interest income came in below forecasts.
JPMorgan Chase reported quarterly profit of $13.1 billion, with its shares hovering near all-time highs.
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