Some of America’s largest banks set aside £20bn to cover cost of loans turning sour in coronavirus slump
Some of America’s largest banks have set aside £20 billion to cover the cost of loans turning sour in the coronavirus slump.
Goldman Sachs, Citigroup and Bank of America made provisions of approaching £10 billion yesterday following similar moves by JP Morgan Chase and Wells Fargo 24 hours earlier.
The decision to set aside so much reveals just how much the US banks expect to lose as customers fail to repay loans due to the pandemic. Businesses have closed down and 16m Americans have lost their jobs in just three weeks.
Insurance: Goldman Sachs, Citigroup and Bank of America made provisions of approaching £10 billion
‘You have to be planning on an assumption that we’re going to be operating into a recession through 2020 and into 2021,’ said Goldman chief David Solomon.
Goldman said profits fell 46 per cent to £962m in the first three months of 2020 compared to the same time last year. It put aside £750m to cover loan losses.
Bank of America reported a 45 per cent drop in profits to £3.2 billion as it set aside almost £4 billion in provisions for loan losses.
Elsewhere, Citigroup beefed up its loan reserves by £3.9 billiopn in the first quarter of the year, dragging its profits down 46 per cent to £2 billion.