U.S. consumers are still maintaining with their credit repayments despite rising costs and a deteriorating economic outlook, in line with executives at major U.S. lenders.
While some borrowers whose funds remained resilient during the pandemic are beginning to default on their loans, top bankers have said.
“The buyer is definitely in pretty good condition,” said Bank of America chief financial officer Alastair Borthwick, citing higher deposits and good asset quality.
The leader of JPMorgan Chase, the country’s largest lender, also said consumer funds remain resilient.
“Even when we go right into a recession, they are going in slightly good condition, with low borrowing and a very good home price,” JPMorgan CEO Jamie Dimon said during Friday’s earnings call.
The bank reported a record profit in the second quarter as consumer loans remained strong, which also contributed to a record interest income.
Bank of America and Wells Fargo profits rose 19% and 57%, respectively, in the second quarter.
![People are shopping in the supermarket](https://nypost.com/wp-content/uploads/sites/2/2023/07/NYPICHPDPICT000014248449.jpg?w=1024)
Even so, some consumers’ funds were starting to strain.
“Asset quality stays strong and write-downs proceed to normalize, still below pre-pandemic levels,” added Borthwick.
Bank of America said the rate of bank card write-offs or debt owed to the bank that’s unlikely to be recovered was 2.6% in the second quarter, well below the pre-pandemic rate of three.03% in the fourth quarter of 2019. 2019 .
Analysts and bankers say consumers with lower credit scores fare worse.
Credit standing firm VantageScore reported late last month that subprime and near-prime borrowers were falling behind on payments as arrears rose across different loan categories.
Arrears on auto loans rose the most sharply, while late payments on bank cards and mortgages increased less so, he said.
Rising insolvencies have also prompted lenders to extend funds for rainy days at a time when concerns about the health of the economy persist.
Wells Fargo allocated $1.71 billion to loan loss provisions in the second quarter, up from $580 million a yr earlier, and acknowledged that net write-offs for consumer loans will proceed to grow regularly.
![Truck for sale](https://nypost.com/wp-content/uploads/sites/2/2023/07/NYPICHPDPICT000012633007.jpg?w=1024)
Still, consumers and businesses have healthy balance sheets and their overall credit quality stays high, CEO Charlie Scharf said.
US consumer spending burned out in May as households reduce on purchases. Although spending increased by just 0.1%, it remains to be supported by strong wage gains in a decent labor market.
“We’re seeing a more cautious consumer, but not necessarily a recessive one,” said Citigroup CEO Jane Fraser.