The Scariest Number From This Week's Megabank Earnings Reports
This is a big week for the banking sector. America's four biggest banks by assets -- JPMorgan Chase (NYSE: JPM), Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and Citigroup (NYSE: C) -- all reported first-quarter earnings this week, setting expectations for the next few weeks and the quarter ahead as regional and smaller national banks follow with earnings of their own.
And while in many ways America's big four reported results that were in line with expectations, investors and analysts were caught off guard by a single metric that caused their earnings to fall sharply from last year and set the stage for what could prove an incredibly painful second quarter of the year and beyond. That metric: loan loss reserves.
Between them, the four banks above took a massive $22 billion in credit costs and loss provisions in the first quarter, preparing their balance sheets for what could be a massive wave of defaults in the months ahead as tens of millions of Americans lose their jobs or see their income fall, and then fall behind on their debt payments.
Source Fool.com
