US banks build reserves on inflation risk

Some big USbanks have again started stockpiling cash to cushion potential loan losses due to growing worries over the war in Ukraine and the impact of inflation on the USeconomy, although trading continues to be bright spot for Wall Street. JPMorgan Chase & Co (JPM.N), Goldman Sachs Group Inc (GS.N) and Citigroup Inc (C.N) combined put aside a $3.36 billion in credit loss reserves in the first quarter, the banks said.

That’s a reversal from the past 12 months when lenders released reserves after COVID-19-related losses failed to materialize, signaling lenders believe the economic rebound from that crisis may be short-lived as inflation soars and the Ukraine conflict roils markets and dampens global growth. “The prospect for higher rates and slowing economic growth likely mean increased credit losses,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.