US banks are unloading billions of dollars in bad debt that they have given up on collecting, according to new numbers from the Federal Deposit Insurance Corporation (FDIC).
In its new Quarterly Banking Profile report, the FDIC says US banks reported $21.3 billion in net charge-offs in the second quarter of the year, due largely to credit card delinquencies and commercial real estate loans going bad.
This is the highest quarterly net charge-off rate since the second quarter of 2013 and 20 basis points higher than the same period last year. The main culprit: consumers struggling with higher interest rates and inflation.
The new numbers come as JPMorgan Chase, Wells Fargo and Bank of America individually disclose billions of dollars in collective net charge-offs in Q2.
- JPMorgan Chase reports its net charge-offs reached $2.2 billion in Q2, up from $1.4 billion in Q2 of last year.
- Wells Fargo reports its net charge-offs surged to $1.3 billion last quarter, up from $764 million one year ago.
- Bank of America reports its net charge-offs hit $1.5 billion, up from $900 million year-over-year.
The FDIC says the total charge-off rate for US banks is now higher than the pre-pandemic average.
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