US Banks Q2 Reserves

The horizon is stormy, but no clear sign of the severity yet.

That is the message from the big banks in this earning season.

The largest 4 banks in the U.S. - JP Morgan, Bank of America, Citi, and Wells Fargo - essentially kept their allowances for credit losses flat in Q2.

The collective reserves of the 4 banks are up 2% Q/Q, or $1.0 billion.

A quick timeline:

🟥 In 2020, big 4 banks quickly raised the reserves by 76% or $45 billion, in fear of the severe impact of the pandemic.

🟩 In the 6 quarters since Q4 2020, 91% of the reserves build-up or $41 billion was gradually released. The worst was avoided with various public relief and private forbearance programs.

🟨 In Q2 2022, after the slight increase, the total reserves are 8.5%, or $5 billion more than the pre-pandemic level in Q1 2020.

Sources:

Company quarterly financial releases.

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