US lenders' profits tumble 70 per cent on pandemic loss provisioning

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US lenders' profits tumble 70 per cent on pandemic loss provisioning

On Tuesday, a survey data from a banking regulator in the United States, Federal Deposit Insurance Corporation, had reported that the US lenders’ profits were plunged by nearly 69.9 per cent to $18.5 billion over the first quarter of the year, compared to the same time a year earlier, as a number of US heavyweight lenders had to bear the brunt of pandemic outbreak and to take precautionary measures against a flurry of debts holding the potential to turn out to be bad loans amid the pandemic-led slump in the recessed US economy.

On top of that, according to the FDIC (Federal Deposit Insurance Corporation) survey report that revealed earlier on the day, the FDIC was quoted saying that a sharply deteriorating economic outlook had prodded the lenders to write off delinquent debts and to put aside billions of dollars as a shield against future losses, adding that nearly half of the US lenders and financial services providers had reported a decline in profit, while 7.3 per cent lenders remained unprofitable.

Aside from that, in what could be contemplated as the first Government survey of the US banking industry ahead of an upcoming Fed stress test, the new report from FDIC had shown that the US lenders had set aside roughly $38.8 billion in order to cover future losses in bad debts, nearly 280 per cent higher than a year earlier, while the number of delinquent debts rose by 15 per cent on a year-on-year basis, mostly catalysed by a 87 per cent surge in charge-offs for industrial and commercial debts.

US lenders handle the downturn effectively, says FDIC Chair Jelena McWilliams

Meanwhile, adding that the US lenders, which had been grappling with a cascade of caustic issues including a near-zero interest rate apart from the pandemic outbreak, had dealt with the crisis effectively and had acted as “a source of strength for the US economy”, FDIC Chair McWilliams said in a statement, “Bank capital and liquidity levels remain strong”.