Citigroup alone saw a $780 million increase in delinquent debts compared to the same quarter last year, with CEO Jane Fraser noting signs of slowing consumer spending, particularly among average Americans.
BofA's net charge-offs rose by 66% to $1.5 billion, while its provision for credit losses increased by $400 million. Goldman Sachs reported $359 million in net charge-offs for the quarter.
Other major US banks, such as JPMorgan Chase and Wells Fargo, also experienced significant losses due to uncollected debts, with $2.2 billion and $1.3 billion in net charge-offs, respectively.
The Federal Reserve Bank of New York recently highlighted the growing concern over US household debt, which reached $17.69 trillion in Q1 2024, a $640 billion year-over-year increase.
Our Opinion:
This news highlights challenges in traditional lending and the need for responsible lending practices and financial education for borrowers. The current climate creates opportunities for innovative financing options, with alternative lenders aiming to expand their market share. Alternative lenders must aim for a balance in seizing potential opportunities while remaining cautious and prepared for the inherent market risks.
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