U.S. Banks to Face Continued Credit Quality Concerns in 2024

As the Fed continues to keep benchmark interest rates steady at 5.25% – 5.50% for the fourth straight meeting in February, analysts anticipate leading U.S. banks to continue allocating higher provisions to address potential loan losses, albeit less aggressively when compared to 2023. According to Visible Alpha consensus, provisions for loan and lease losses across leading U.S. national and regional banks are expected to rise by an average of +12% year over year in 2024. Among the top 5 U.S. national banks, PNC (NYSE: PNC) is expected to have the most significant increase in provisions, allocating around $1.3 billion (+72% YoY) for potential loan losses in 2024. Bank of America (NYSE: BAC) is projected to increase its provisions by +37%, followed by JPMorgan Chase (NYSE: JPM) at +14%, Citigroup (NYSE: C) at +6%, and Wells Fargo (NYSE: WFC) at +3%.

Looking at leading regional U.S. banks, First Citizens BancShares (NASDAQ: FCNCA) is estimated to increase its provisions to $760 million (+15% YoY) in 2024. This is followed by Citizens Financial Group (NYSE: CFG) at +12% and Truist Financial (NYSE: TFC) at +4%. In contrast, US Bancorp (NYSE: USB) and M&T Bank (NYSE: MTB) are expected to see a decrease of -3% in their provisions for loan losses, with estimated amounts of $2.2 billion and $626 million, respectively. Analysts are also expecting double-digit growth in total non-performing loans for the leading national and regional U.S. banks, with an average increase of +11% year over year in 2024, reflecting continued credit quality concerns. This growth, while still strong, is expected to be lower than the average +25% increase seen in 2023.

Sector: Financials
Industry: Diversified and Regional Banks
Tickers: JPM_US, BAC, WFC_US, C_US, PNC, TFC, USB_US, CFC, FCNCA_US, MTB_US