The bank's income was largely affected by an increase in credit costs as Chase builds up its reserve in preparation for the effects of the coronavirus on clients. The pandemic hit the US economy hardest only at the very end of Q1, but Chase's credit costs in the period still totaled $8.3 billion, comprising $1.5 billion in charge-offs and a whopping $6.8 billion in buildup to its credit reserves.
The latter is being set aside because the bank is preparing for the effects of a recession and the accompanying possible losses on loans made to consumers and companies working to weather the coronavirus crisis, per the Journal. And the bank may not stop there, saying it might set aside even more of its profits in the future to cover loan losses if its dire expectations for Q2 prove true, such as a catastrophic expected unemployment rate of 20% .
While Chase is clearly bracing for serious loan losses, its customer-focused approach to the coronavirus could yield it favor with clients in exchange.
These measures to continue helping customers through the crisis even in the face of major losses could help the bank curry favor with clients and give it a human touch despite its monolithic size.Business Insider Intelligence analyzes the banking industry and provides in-depth analyst reports, proprietary forecasts, customizable charts, and more.
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