Big banks' reserve releases tick higher in Q2

|By:, SA News Editor

The big banks aren't quite ready to let go of their reserve releases: The big four - JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) - released a combined $2.25B of their bad-loan reserves in Q2, up nearly 20% from the $1.88B they released in Q1.

The banks continue to see improvement in their customers’ credit quality, but their earnings continue to rely in part on freeing up some of their rainy-day cushions, rather than being able to generate strong earnings from their operating businesses.

Even with the Q2 uptick, the banks are releasing less in the way of reserves than they have for most of the past four years, and analysts see the practice ending before too much longer.

Some regional banks such as Comerica (NYSE:CMA) and Huntington Bancshares (NASDAQ:HBAN) that had been releasing reserves started building their reserves up again by small amounts during Q2.