U.S. banks took a hit of nearly $19 billion on bad loans in the second quarter, the most in more than three years, as banks grapple with rising defaults on credit card and commercial real estate borrowers, according to the Financial Times .
That figure was up nearly 17 percent from the previous three months and 75 percent higher than the same period last year, with banks overall losing 61 cents on every $100 in loans they originated.
Borrowers with floating-rate loans had to face higher repayments after the Federal Reserve implemented a series of aggressive interest rate hikes.
In addition, Moody’s pointed out that at a time when loan quality is deteriorating, rising interest rates have put more pressure on banks’ profitability, because banks have to pay higher interest rates to retain depositors seeking higher returns.
