JPMorgan Chase, Wells Fargo, Bank of America and Citi are unloading billions of dollars in bad debt that they’ve given up on recovering.

New earnings data shows the four largest banks in the country collectively recorded $6.9 billion in net charge-offs in Q3 of this year, primarily driven by credit card delinquencies and soured consumer loans.

JPMorgan says its net charge-offs hit $2.087 billion in Q3, up nearly 40% from $1.497 billion registered in Q3 of 2023.

Wells Fargo says its net charge-offs surged to $1.111 billion in Q3, an increase of nearly 54% from $722 million recorded a year ago.

Citi says its net credit on losses reached $2.172 billion, an over 32% jump from the $1.637 billion witnessed in the same period last year.

And BofA says net charge-offs hit $1.534 billion in the same quarter, up 64% from $931 million a year ago.

The news comes after US credit card rates hit a fresh all-time high in August.

Adam Kobeissi, founder and editor-in-chief of The Kobeissi Letter, says rates have increased by seven percentage points in just two years, hitting 23.4% a couple of months ago.

In addition, total outstanding US credit card debt has soared to $1.36 trillion – the highest level in history.

“US consumers now have a record $1.36 trillion in credit card debt and other revolving credit meaning they pay a massive $318 billion annual interest.

To put this into perspective, Americans paid just half of that in 2019 at ~$160 billion.

Meanwhile, credit card serious delinquency rates are at 7%, the highest level since 2011. The credit card debt bubble is popping.”

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Customers at American Express, JPMorgan Chase and Capital One have racked up billions of dollars in unspent credit card points – but the value of those rewards is decaying.

The financial giants’ customers are sitting on a staggering $34 billion worth of unused rewards as of 2023, reports the Wall Street Journal, citing annual reports.

And the value of those rewards is falling due largely to inflation, as goods and services now require more points than they used to.

The end result is that someone who gathered 100,000 Capital One points in 2020 and left it alone now has a pile that’s effectively worth about 82,600 points.

Airlines and hotels have also quietly tweaked the number of points required for redemptions through dynamic pricing models, which tie prices to the current cash price.

Overall, the number of points or miles needed to book a flight has surged 28% since 2019, according to a study from the aviation consultancy firm IdeaWorks.

Financial firms have offered larger sign-up bonuses in recent years, but they’ve decided not to increase the value of points at large, which have long been centered at about 1 cent.

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The biggest banks in the US are preparing to report a third quarter marked by shrinking margins and declining profits, according to a new report.

JPMorgan Chase and Wells Fargo release their Q3 earnings on Friday.

JPMorgan is expected to reveal a nearly 8% drop in earnings per share while Wells Fargo will likely report a nearly 14% drop in earnings per share, reports Reuters, citing data compiled by the London Stock Exchange Group (LSEG).

Next week, Bank of America is expected to report an approximately 14% drop in earnings per share, Citigroup is expected to report a 20% drop, and Goldman Sachs is expected to report a 35% drop.

The across the board decline is due to a combination of rising deposit costs, weak loan demand and shrinking net interest income (NII).

Although banks are feeling pressure from decreasing margins, they’re expected to generate strong revenues from other banking divisions, such as investment banking and trading.

Analysts at Oppenheimer say consumer loan delinquencies are down and notes banks have also shored up significant reserves to cover potential office loan losses.

Oppenheimer also expects the industry to post a 7% rise in investment banking revenues for all banks on average, and banks may report a decline in trading revenue amid a seasonal drop in volume.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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