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Wall Street Debates the Real Message Behind Bank Loss Provisions

  • Traders mull bad loan reserves as prudent acts or danger signs
  • Consumers are going deeper into debt: Miller Tabak’s Maley
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Citigroup’s Second-Quarter Profit Soars Past Estimates

As the big banks unveiled second-quarter earnings, investors heard a common refrain: “we’re increasing provisions for client loan defaults.” While bank executives said these were just logical precautions for uncertain times, some investors saw them as hazard signals.  

Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. all increased their provisions for credit losses for the first time since the height of the pandemic. The accounting changes suggest elevated concern that borrowers may soon not be able to pay back their debts.