September 28, 2023


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America’s Big Banks Girded for a Wave of Bad Loans. They’re Still Waiting.

America’s top bankers signaled the economic recovery has held up better than they expected and should continue in the new year, releasing some of the stockpiles of cash they had set aside for a wave of soured loans.

JPMorgan Chase & Co. posted a record quarterly profit while Citigroup Inc. and Wells Fargo & Co. both posted higher-than-expected earnings in the final three months of the year, boosted by the reserve releases and Wall Street’s record-setting run.

The period capped a tumultuous 2020, when a sharp decline in economic activity in the spring gave way to an uneven recovery that has lifted some consumers and businesses while many others continue to struggle.

Executives said they have grown more confident that vaccines will get people back to work and that fresh stimulus—and the potential for more under President-elect Joe Biden—will help consumers and businesses this year. But they stopped short of saying the economy is out of the woods, and their balance sheets continue to reflect a deep concern about the health of their customers.

Bankers warned that losses on credit cards, real-estate loans and other types of debts are still likely to rise when government relief programs eventually wear off, hitting their lowest-income customers in particular.