The financial performance of the big
The three banks have a more positive, though cautious outlook for the economy, which was reflected in an accounting maneuver each employed that contributed significantly to their better results.
Still, those amounts are just a fraction of the tens of billions of dollars into their so-called loan-loss reserves to cover potentially bad loans in the first months of the pandemic. Banks are required to set aside loans that may become unpayable on their balance sheet to show whether they have enough money to meet depositors’ and regulators’ needs.
This largely had to do because millions of customers and businesses who were financially fine in
But trillions of dollars’ worth of government stimulus and the reopening of businesses in many parts of the country has resulted in less financial carnage than what bank executives and investors initially expected. Notably the Paycheck Protection Program, which helped businesses cover basic expenses like payroll, helped keep some businesses afloat.
“The fear of a wave of COVID-related bankruptcies has not occurred,” said
In releasing funds from loan-loss reserves, the banks cited the improvement in the economy. Though still not fully recovered from the shutdowns of March and April, the economic picture is better than it was six or nine months ago. And with mass vaccination efforts now underway, banks are feeling a bit better on where things stand.
But there’s still a significant degree of uncertainty when it comes to the banks.
“Thank God for the vaccine,” said
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