Depending on the extent and duration of the strike, asset quality and profitability could come under pressure for banks, especially smaller institutions lacking adequate reserves for loan losses
, which could pressure ratings.
According to the Wall Street Journal, this is the first time since 2009 that Wells Fargo has moved to build up reserves for loan losses
. The bank's portfolio of energy loans represents totals about $18 billion, or about 2% of all outstanding loans.
Monthly data from the US Federal Reserve shows that, as a whole, large commercial banks increased their reserves for loan losses
by just under 2 per cent in August, to $70bn, after 10 consecutive months of drawdowns.
According to a BSP statement, "the decline in the NPL comes amidst a more conservative handling of their reserves for loan losses
." Thrift banks' loan loss provisioning stood at 70.27 percent during the period, which is a lower NPL coverage ratio than the same time last year of 72.28 percent but higher than end-March's 69.37 percent.
Bond-trading and investment-banking revenue was aided by a decline in reserves for loan losses
, which bolstered earnings.
The bank's net loss for 2010 has been revised upward because of reserves for loan losses
and clients' advance payments of RUB105.5bn.
Loans net of reserves for loan losses
have increased USD73.3m or USD21.2 percent over the same period.
In striving to paint a rosier picture, Hunter said the primary factor in the second-quarter net loss was an increase in the allowance from $22.5 million at quarter end to $28 million."The increase in reserves for loan losses
doesn't reflect deterioration in the loan portfolio," maintained Hunter.
In view of the weak economy, Siuslaw officials said, the bank is continuing to put more money into its reserves for loan losses
- $800,000 in the first six months of this year.
(1) This has tended to mean that reserves for loan losses
on a bank's balance sheet need to grow significantly during an economic downturn, a time associated with increased credit impairment and default events.
Forced to set aside large reserves for loan losses
due to persistent housing market weakness, the U.S.
The bank also estimates 57 billion yen in operating profit -- the most important gauge of a bank's core profitability before general reserves for loan losses
are subtracted -- for fiscal 2001, it said.