Megabanks like JPMorgan Chase boosted loan-loss provisions to record levels in the second quarter in preparation for what could be a wave of loan defaults.
The results show how Wall Street giants such as Citigroup leaned on volatile businesses in the second quarter to counter mounting signs of distress from lending operations.
The country's largest bank said second-quarter profit fell 51% to $4.69 billion, a smaller drop than forecast, as record trading revenue helped counter the biggest loan-loss provision in its history.
Bankers had asserted in April that they could handle a slump in oil prices tied to the coronavirus pandemic. Continued volatility, combined with declining collateral values and a rise in bankruptcies for exploration companies, is denting their confidence.
Deferral periods on scores of commercial loans will soon be ending, and many banks’ profits this year could turn on whether borrowers can resume making payments or will seek extensions.
With credit quality suffering due to the coronavirus outbreak, the online business lender faces onerous loan repayments if it can't renegotiate a corporate debt facility.
The last bank where he was CEO, Opus Bank, ran into trouble largely because it made too many acquisitions in too short a time span. This time around, Gordon will take a more methodical approach.
As revenue-starved retailers fall further behind on rent payments, landlords' cash flow will be strained, and defaults on commercial real estate loans could rise.
Two years ago, the Tulsa, Okla., bank expanded its Native American casino lending business nationwide. It seemed like a great plan until the coronavirus pandemic struck.
