America’s largest banks are reporting a rapid increase in the number of substandard, questionable and potentially loss-making loans on their balance sheets, according to a new report.
The amount of money tied up in criticized loans, which are showing emerging signs of risk and weakness that could lead to defaults, just reached the highest level since 2020. reports S&P Global.
JPMorgan Chase witnessed the largest year-over-year increase, with the number of criticized loans at the company rising 26.3% to reach $26.01 billion at the end of the third quarter.
Meanwhile, Wells Fargo recorded a 17.9% year-over-year increase in criticized loans, to $37.6 billion, while Bank of America recorded a 15.2% year-over-year increase, to $26.06 billion .
That brings the total amount of criticized loans at the trio of banks since the third quarter of 2023 to $89.67 billion, reflecting a trend happening at banks across the board.
“Critiqued loans at US public banks totaled $279.98 billion, up from $240.37 billion at the end of 2023, and such loans at the 100 largest US public banks totaled $260.48 billion, up from $219.82 billion at the end 2023.”
Of the top banks with total assets of more than $50 billion, four lenders recorded a triple-digit increase in criticized loans.
Flagstar Financial recorded a 338.6% year-over-year increase in criticized loans, while First Horizon, Valley National Bancorp and Webster Financial Corp witnessed 112.2%, 110.1% and 102.8% year-over-year -year increases in criticized loans.
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