Three of the largest US banks said on Tuesday they had set aside a whopping $28 billion (Dh102.8bn) for loan losses, in a stark reminder that much of the economic pain from the coronavirus pandemic is still to come.
Borrowers have been propped up by trillions of dollars in government and bank assistance, cheap credit and loan forbearance programmes, but some of that support is going away, and banks said they fear losses will spike.
"The consumers' incomes are up, savings are up and home prices up," said JPMorgan Chase chief executive Jamie Dimon on a call with journalists. "The recessionary part" will come later, he said.
JPMorgan and Citigroup each reported huge second-quarter profit declines on Tuesday, while Wells Fargo posted its first loss since 2008.
Banks with big Wall Street businesses were able to offset their loan woes with huge gains in capital markets revenue, particularly trading. The rough results were almost entirely due to loan-loss provisions.
The unprecedented government aid programmes have created a disconnect between the financial markets and the economy, such that financial conditions look sunny, but could turn upside down quickly if the temporary assistance expires.
Executives warned that there is still a lot of guesswork involved. Under new accounting rules, lenders have to reserve for the entire life of a loan upfront. That would be tricky under normal circumstances, but when a deadly virus is hitting the economy in unpredictable waves, it is especially hard to say how long the downturn might last.
More than 13 million people have been infected by the disease globally and at least 572,945 have died since the outbreak began in early December.
To prevent its spread, governments across the world have imposed varying degrees of lockdowns, causing widespread business closures, layoffs and retractions in spending.
The US unemployment rate hit 11.1 per cent in June while gross domestic product fell 5 per cent during the first quarter, according to government data.
JPMorgan is assuming unemployment will remain in the double-digits through the first half of 2021, while Citigroup expects GDP to fall by more than 35 per cent before recovering, executives said.
The biggest lending concerns center on credit cards, which tend to be riskier and, unlike mortgages or auto loans, do not have any collateral for a bank to recoup if a borrower defaults.
The business has not yet seen major upheaval. Although spending declined because of lockdowns, borrowers used stimulus checks to stay current or pay off debt.
Citigroup, one of the biggest card lenders in the world, saw delinquency and default rates decline in the second quarter.
Wall Street businesses did well, however. JPMorgan's bond-trading business reported a 99 per cent increase in revenue, while Citigroup's rose 68 per cent.
That bodes well for Goldman Sachs Group, Morgan Stanley and Bank of America, which announce results later this week.
Wells Fargo does not have a large investment bank, and is still dealing with the aftermath of a sales scandal that erupted in 2016. Its $2.4bn quarterly loss was much larger than analysts had expected, and the bank expects things to get worse.
"Our view of the length and severity of the economic downturn has deteriorated considerably," said chief executive Charlie Scharf.
JP Morgan shares were up slightly; Citi and Wells Fargo shares traded lower.
Essentials
The flights
Emirates and Etihad fly direct from the UAE to Los Angeles, from Dh4,975 return, including taxes. The flight time is 16 hours. Alaska Airlines, United Airlines, Delta Air Lines, Aeromexico and Southwest all fly direct from Los Angeles to San Jose del Cabo from Dh1,243 return, including taxes. The flight time is two-and-a-half hours.
The trip
Lindblad Expeditions National Geographic’s eight-day Whales Wilderness itinerary costs from US$6,190 (Dh22,736) per person, twin share, including meals, accommodation and excursions, with departures in March and April 2018.
UAE currency: the story behind the money in your pockets
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UAE currency: the story behind the money in your pockets
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Meatless Days
Sara Suleri, with an introduction by Kamila Shamsie
Penguin
Results:
5pm: Abu Dhabi Fillies Classic (PA) Prestige Dh 110,000 1.400m | Winner: AF Mouthirah, Tadhg O’Shea (jockey), Ernst Oertel (trainer)
5.30pm: Abu Dhabi Colts Classic (PA) Prestige Dh 110,000 1,400m | Winner: AF Saab, Antonio Fresu, Ernst Oertel
6pm: Maiden (PA) Dh 80,000 1,600m | Winner: Majd Al Gharbia, Saif Al Balushi, Ridha ben Attia
6.30pm: Abu Dhabi Championship (PA) Listed Dh 180,000 1,600m | Winner: RB Money To Burn, Pat Cosgrave, Eric Lemartinel
7pm: Wathba Stallions Cup (PA) Handicap Dh 70,000 2,200m | Winner: AF Kafu, Tadhg O’Shea, Ernst Oertel
7.30pm: Handicap (PA) Dh 100,000 2,400m | Winner: Brass Ring, Fabrice Veron, Ismail Mohammed
Gran Gala del Calcio 2019 winners
Best Player: Cristiano Ronaldo (Juventus)
Best Coach: Gian Piero Gasperini (Atalanta)
Best Referee: Gianluca Rocchi
Best Goal: Fabio Quagliarella (Sampdoria vs Napoli)
Best Team: Atalanta
Best XI: Samir Handanovic (Inter); Aleksandar Kolarov (Roma), Giorgio Chiellini (Juventus), Kalidou Koulibaly (Napoli), Joao Cancelo (Juventus*); Miralem Pjanic (Juventus), Josip Ilicic (Atalanta), Nicolo Barella (Cagliari*); Fabio Quagliarella (Sampdoria), Cristiano Ronaldo (Juventus), Duvan Zapata (Atalanta)
Serie B Best Young Player: Sandro Tonali (Brescia)
Best Women’s Goal: Thaisa (Milan vs Juventus)
Best Women’s Player: Manuela Giugliano (Milan)
Best Women’s XI: Laura Giuliani (Milan); Alia Guagni (Fiorentina), Sara Gama (Juventus), Cecilia Salvai (Juventus), Elisa Bartoli (Roma); Aurora Galli (Juventus), Manuela Giugliano (Roma), Valentina Cernoia (Juventus); Valentina Giacinti (Milan), Ilaria Mauro (Fiorentina), Barbara Bonansea (Juventus)
Who is Ramon Tribulietx?
Born in Spain, Tribulietx took sole charge of Auckland in 2010 and has gone on to lead the club to 14 trophies, including seven successive Oceania Champions League crowns. Has been tipped for the vacant New Zealand national team job following Anthony Hudson's resignation last month. Had previously been considered for the role.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
More coverage from the Future Forum
Gothia Cup 2025
4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
Sheikh Zayed's poem
When it is unveiled at Abu Dhabi Art, the Standing Tall exhibition will appear as an interplay of poetry and art. The 100 scarves are 100 fragments surrounding five, figurative, female sculptures, and both sculptures and scarves are hand-embroidered by a group of refugee women artisans, who used the Palestinian cross-stitch embroidery art of tatreez. Fragments of Sheikh Zayed’s poem Your Love is Ruling My Heart, written in Arabic as a love poem to his nation, are embroidered onto both the sculptures and the scarves. Here is the English translation.
Your love is ruling over my heart
Your love is ruling over my heart, even a mountain can’t bear all of it
Woe for my heart of such a love, if it befell it and made it its home
You came on me like a gleaming sun, you are the cure for my soul of its sickness
Be lenient on me, oh tender one, and have mercy on who because of you is in ruins
You are like the Ajeed Al-reem [leader of the gazelle herd] for my country, the source of all of its knowledge
You waddle even when you stand still, with feet white like the blooming of the dates of the palm
Oh, who wishes to deprive me of sleep, the night has ended and I still have not seen you
You are the cure for my sickness and my support, you dried my throat up let me go and damp it
Help me, oh children of mine, for in his love my life will pass me by.
Countdown to Zero exhibition will show how disease can be beaten
Countdown to Zero: Defeating Disease, an international multimedia exhibition created by the American Museum of National History in collaboration with The Carter Center, will open in Abu Dhabi a month before Reaching the Last Mile.
Opening on October 15 and running until November 15, the free exhibition opens at The Galleria mall on Al Maryah Island, and has already been seen at the Jimmy Carter Presidential Library and Museum in Atlanta, the American Museum of Natural History in New York, and the London School of Hygiene and Tropical Medicine.
THE SIXTH SENSE
Starring: Bruce Willis, Toni Collette, Hayley Joel Osment
Director: M. Night Shyamalan
Rating: 5/5
Global Fungi Facts
• Scientists estimate there could be as many as 3 million fungal species globally
• Only about 160,000 have been officially described leaving around 90% undiscovered
• Fungi account for roughly 90% of Earth's unknown biodiversity
• Forest fungi help tackle climate change, absorbing up to 36% of global fossil fuel emissions annually and storing around 5 billion tonnes of carbon in the planet's topsoil
Dr Amal Khalid Alias revealed a recent case of a woman with daughters, who specifically wanted a boy.
A semen analysis of the father showed abnormal sperm so the couple required IVF.
Out of 21 eggs collected, six were unused leaving 15 suitable for IVF.
A specific procedure was used, called intracytoplasmic sperm injection where a single sperm cell is inserted into the egg.
On day three of the process, 14 embryos were biopsied for gender selection.
The next day, a pre-implantation genetic report revealed four normal male embryos, three female and seven abnormal samples.
Day five of the treatment saw two male embryos transferred to the patient.
The woman recorded a positive pregnancy test two weeks later.
Tewellah by Nawal Zoghbi is out now.
About Seez
Company name/date started: Seez, set up in September 2015 and the app was released in August 2017
Founder/CEO name(s): Tarek Kabrit, co-founder and chief executive, and Andrew Kabrit, co-founder and chief operating officer
Based in: Dubai, with operations also in Kuwait, Saudi Arabia and Lebanon
Sector: Search engine for car buying, selling and leasing
Size: (employees/revenue): 11; undisclosed
Stage of funding: $1.8 million in seed funding; followed by another $1.5m bridge round - in the process of closing Series A
Investors: Wamda Capital, B&Y and Phoenician Funds
The Bio
Hometown: Bogota, Colombia
Favourite place to relax in UAE: the desert around Al Mleiha in Sharjah or the eastern mangroves in Abu Dhabi
The one book everyone should read: 100 Years of Solitude by Gabriel Garcia Marquez. It will make your mind fly
Favourite documentary: Chasing Coral by Jeff Orlowski. It's a good reality check about one of the most valued ecosystems for humanity
MATCH INFO
Cricket World Cup League Two
Oman, UAE, Namibia
Al Amerat, Muscat
Results
Oman beat UAE by five wickets
UAE beat Namibia by eight runs
Namibia beat Oman by 52 runs
UAE beat Namibia by eight wickets
UAE v Oman - abandoned
Oman v Namibia - abandoned
