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JPMorgan CEO Jamie Dimon. Photo: J. Lawler Duggan/For The Washington Post via Getty Images

Wells Fargo swung to its first loss since the financial crisis — while JPMorgan Chase and Citigroup reported significantly lower profits from a year earlier — as the banks set aside billions of dollars more in the second quarter for loans that may go bad.

Why it matters: The cumulative $28 billion in loan loss provisions that banks have so far announced they’re reserving serves as a signal they’re preparing for a colossal wave of loan defaults as the economy slogs through a coronavirus-driven downturn.

The big picture: Quarterly results from the big banks are trickling out this week. So far, a trend has emerged: Their earnings are clipped as they buffer credit loss reserves, but those earnings are offset by stock-and-bond trading divisions that are thriving amid feverish market activity.

  • That’s not the case for Wells Fargo, which doesn't have the same exposure to the booming stock market. It reported a loss of $2.4 billion.
  • What they’re saying: “Our view of the length and severity of the economic downturn has deteriorated considerably from the assumptions used last quarter,” Wells Fargo CEO Charlie Scharf said in a press release.

Between the lines: Wells Fargo allocated $9.6 billion for potential loan losses — more than double what it put aside in the first quarter as the economy started to show signs of strain from the coronavirus-imposed lockdowns.

  • JPMorgan set aside another $10 billion, after putting reserving roughly $8 billion in the first quarter.
  • Citi put aside $8 billion, after the $7 billion it allocated in Q1.

By the numbers: At JPMorgan, the country’s biggest bank, profits fell 51% from a year earlier to $4.7 billion — dragged down by what it set aside to cover future loan losses.

  • Profits at Citi fell 73% from a year earlier — to $1.3 billionalso crimped by how much it set aside for loans possibly going bad.
  • JPMorgan’s trading arm saw record revenue, while Citi’s trading division saw revenues rise 55% from a year earlier.

The bottom line: “We still face much un­cer­tainty re­garding the fu­ture path of the econ­omy,” despite some positive economic data and government action, JPMorgan CEO Jamie Dimon said in a press release.

Go deeper

Wells Fargo fires over 100 employees for fraudulently applying for COVID-19 relief funds

Photo: Robert Alexander/Getty Images

Wells Fargo has fired between 100 and 125 employees whom the company believes defrauded the Small Business Administration by applying for and receiving coronavirus relief funds for themselves, according to an internal memo obtained by Axios.

  • More terminations could be on the way, as a source familiar with the situation told Axios an investigation into the matter is ongoing.
Updated 8 hours ago - Technology

From Malcolm X to "Free Britney," new media shapes the justice system

Illustration: Shoshana Gordon/Axios

True crime documentaries, podcasts and social media campaigns are bringing new attention to real-world legal proceedings — and are often affecting the outcome.

Why it matters: New media platforms can instantly put a national spotlight on cases that have long been forgotten or buried under red tape.

Updated 10 hours ago - Health

The next big bottleneck in the global vaccination effort

Illustration: Rae Cook/Axios

The world still needs more coronavirus vaccines, but an additional bottleneck has emerged in many low-income countries: They need help getting shots in arms.

Why it matters: Increasing vaccination rates across the world is both a humanitarian necessity and the best way to prevent dangerous new variants from emerging, but it increasingly requires complex problem-solving.