NEW YORK - Major US banks reported mixed fourth-quarter results as executives pointed to the rising odds of a "mild recession," with inflation and interest rate hikes challenging households and businesses.
The biggest US bank, JPMorgan Chase, set aside $1.4-billion in fresh reserves in case of loan defaults, noting that its "central" scenario is "a mild recession" with somewhat higher unemployment.
Bank of America accounted for $403-million in possible bad loans as Chief Executive Brian Moynihan alluded to an "increasingly slowing economic environment," while Citigroup reserved $640-million and Wells Fargo $397-million for similar purposes.
Citigroup Chief Financial Officer Mark Mason described the outlook as "a rolling country-level recession rather than a simultaneous global downturn."
But Mason cited the moderate winter thus far in Europe as an ameliorating factor in the outlook, while noting that credit card delinquencies are still coming in at exceptionally low levels, a sign of consumer resilience.
"Our base case is still a mild recession in the latter part of 2023," he said in a briefing with reporters, calling the outlook "very manageable."
Bank shares initially tumbled on the reports, but reversed course in the middle of the session. All four banks finished solidly higher.
Briefing.com analyst Patrick O'Hare noted that JPMorgan Chief Executive Jamie Dimon has warned last year of a potential economic "hurricane."
"The banks are bracing for at least a mild recession, but it's not a hard landing," O'Hare told AFP.