Three U.S. Banks Seen Splitting $1 Billion Reserve-Release Boon


The worst fears about how the pandemic would affect U.S. consumer credit quality never materialized, and that could mean a $1 billion windfall split among three of the nation’s biggest banks.

That’s analysts’ estimate for how much the lenders -- JPMorgan Chase & Co., Bank of America Corp., and Wells Fargo & Co. -- will report in reserve releases when they announce second-quarter results this week.

It’s another sign the industry is returning to normal reserve levels after the six largest U.S. banks set aside more than $35 billion to cover anticipated loan losses at the start of the pandemic in 2020.

Three U.S. Banks Seen Splitting $1 Billion Reserve-Release Boon

Wells Fargo accounts for the biggest share of the total, with analysts predicting the San Francisco-based bank will add back about $545 million to its bottom line from unneeded reserves. Bank of America is expected to reclaim $274 million. Both companies each removed more than $1 billion from reserves in the first quarter.

JPMorgan, which slashed its reserve by more than $4 billion in the first quarter, is expected to release $239 million for the second quarter, according to the estimates.

Citigroup Inc. is the exception. Analysts predict the New York-based lender will say it boosted its reserves by about $323 million for the second quarter after it cut the figure by $2.1 billion in the previous three months.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.