dChan - Q Origins Project Archive

BofA Profit Plunges 45% On $4.8 Billion In Expected Credit Losses From chinavirus

Bank of America joined JPMorgan and Wells Fargo in setting aside billions of dollars for upcoming loan losses as the bank braces for a surge in defaults and delinquencies on its loans amid the complete US economic shut down.

The bank reports $22.8 billion in revenue (missing the exp. $22.91BN) generating $0.40 in EPS (missing the exp. $0.46) and $4.0 billion in profit, which was down 45% from the $7.3 billion last year. As the bank allocated $4.76 billion for loan losses (above the $3.93BN expected), an increase of $3.7 billion Y/Y and the most since 2010, as its business and household clients reel from the coronavirus pandemic. The bank joins competitors JPMorgan and Wells Fargo which posted their highest provisions in a decade Tuesday (JPMorgan set aside a little over $8 billion, Wells used $4 billion as the appropriate number).

The three big lenders have collectively stashed away more than $17 billion to cover defaults. A full breakdown of all reported credit provisions so far is as follows:

JPM: provisions $8.3b (+$6.8b)

C: provisions $7b (+$4.8bln)

BAC: provisions $4.8b (+$3.6b)

WFC: provisions $4b (+$3b)

USB: provisions $993m (+$600m)

GS: provisions $937m (+$601mln)

PNC: provisions $914m (+$702m)

Banks are trying to get ahead of the tsunami of loan losses they expect to come from the pandemic bringing large swaths of the global economy to a virtual standstill. While defaults haven’t yet spiked, bank efforts to build up their reserves show they’re bracing for a major recession.

Separately, BofA reported net interest income of $12.1B (or $12.3B on an FTE basis), down 2%, driven primarily by lower interest rates, partially offset by loan and deposit growth. The closely watched Net Interest Income was unchanged at 2.77% compared to 4Q19.https://www.zerohedge.com/markets/bofa-profit-plunges-45-48-billion-expected-credit-losses-coronacrisis

regarding muh credit loss provisions..this si a game they play and have for years goes like this: rathchet up the number in that area and when it does not quite get to that amount they then "book" the difference as a profit.'''

So it's to say you bought a car from someone for $10K but had $12k to spend..using their model you could book that unspent $2k as a profit.

This is a multi-quarter set-up to be able to apply those amounts to the balance sheet going forward..this is but one of the games they play however it may backfire on them as we've never been in a situation like this before.