Bank of America, Citigroup and Goldman Sachs are reporting losses of $4.139 billion as lenders write off mounting debts that customers cannot pay.
In its latest earnings report, Citigroup said its net credit losses (debts it doesn't expect to repay) reached $2.28 billion in the second quarter of this year.
This figure is nearly $780 million higher than the $1.504 billion in arrears recorded in the same quarter of 2023.
Citigroup CEO Jane Fraser said she is starting to see signs that the average American consumer is cutting back on spending, Bloomberg reports.
“The consumer is slowing down. A lot of the spending and growth areas we see in the underlying numbers are being driven by affluent customers.”
Meanwhile, BofA reports that its net write-downs reached $1.5 billion in the second quarter of 2024, up 66% from $900 million in the second quarter of 2023.
The bank also reported that its provisions for loan losses rose $400 million from $1.1 billion in the second quarter of 2023 to $1.5 billion last quarter.
As for Goldman Sachs, its net write-downs last quarter reached $359 million, according to the bank.
Other US banking giants are also reporting large losses due to bad debts.
JPMorgan Chase reported that it lost $2.2 billion last quarter on outstanding debt, while Wells Fargo recorded net write-downs of $1.3 billion in the second quarter of this year.
In May, the Federal Reserve Bank of New York (FDNY) raised the alarm about rising levels of US household debt. According to the FDNY Center for Microeconomic Data, U.S. household debt reached $17.69 trillion in the first quarter of this year, up $640 billion from the previous year.
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