According to new figures from the Federal Deposit Insurance Corporation (FDIC), US banks are increasingly paying off billions of dollars in bad debts that they have officially given up on collecting.
In its new Quarterly Banking Profile report, the FDIC says U.S. banks reported $21.3 billion in net charge-offs in the second quarter of the year, largely due to credit card delinquencies and sour commercial real estate loans.
That’s the highest quarterly net charge-off rate since the second quarter of 2013 and 20 basis points higher than the same period last year, as customers continue to battle higher interest rates and inflation.
The new figures come as JPMorgan Chase, Wells Fargo and Bank of America individually announce billions of dollars in collective net charge-offs in the second quarter.
JPMorgan Chase said net charge-offs in the second quarter were $2.2 billion, compared to $1.4 billion in the second quarter of last year.
Wells Fargo says net charge-offs rose to $1.3 billion last quarter, up from $764 million a year ago.
And Bank of America says net charge-offs are $1.5 billion, up from $900 million year-over-year.
The FDIC says the overall charge-off rate for U.S. banks is now higher than the pre-pandemic average.
The charge-off rate for credit cards was particularly notable in the second quarter: 4.82%, an increase of 13 basis points compared to the previous quarter.
This is the highest credit card charge rate since the third quarter of 2011.
The data is consistent with a recent report from the Philadelphia Federal Reserve, which found that delinquent credit card balances reached an all-time high in the first quarter of this year, according to data dating back to 2012.
Overall, the FDIC says second-quarter net revenues from all 4,539 FDIC-insured commercial banks and thrifts were $71.5 billion, an increase of $7.3 billion from the previous quarter.
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