Data Snacks, Member Exclusive

Data Snack: Banks’ Q2 earnings reports reveal losses in corporate lending

  • Six of the top US banks have so far revealed corporate lending losses in their recent earnings reports, amounting to $1.32 billion altogether.
  • The numbers paint a foreboding picture of what’s happening in the market right now.

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Data Snack: Banks’ Q2 earnings reports reveal losses in corporate lending

Six of the big US banks recently published their Q2 earnings reports, exposing some surprising numbers regarding corporate lending.

Bank of America, Morgan Stanley, JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo all reported losses in the corporate lending space – with Bank of America reporting the biggest loss at $320 million.

Altogether, these banks' corporate loan losses totaled $1.32 billion.

The update marks quite a shift in tone compared to early this year, when demand for business lending was at a high, according to the Fed's quarterly Senior Loan Officer Opinion Survey in January.

The sudden change has left banks in an awkward situation, where they’ve bulked up their corporate lending game in response to a vibrant market earlier this year, but aren’t able to actually reap any benefits. Banks still currently have around $80 billion worth of deals to offload.

It looks like these lenders are taking steps to offset the situation. Bank of America's chief financial officer Alastair Borthwick said the bank has no more deals in the pipeline to underwrite, and JPMorgan Chase has been reducing market share since last year.

Still, the losses may signify a serious downturn in the market – with investors shying away from investing and businesses shying away from business-ing. 

The overall atmosphere feels in line with 'the party’s over folks, time to go home', leaving banks all dressed up with nowhere to go.

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