Time New York: Fri 17 Nov 16:15 pm  |  Save 15% on H&R Block Online

  
caticonslite_bm_alt

U.S. Banks to Face Loan Losses from Hurricanes Harvey & Irma

Zacks

Hurricanes, Harvey and Irma, are expected to make U.S. banks suffer billions of dollars in losses, per a report published by The Street.

Since borrowers in the affected areas are being unable to repay their loans, banks like JPMorgan Chase & Co. JPM, Bank of America Corporation BAC, Citigroup Inc. C and a few others are dreading huge loan losses that they might have to face.

According to analysts at The Goldman Sachs Group Inc. GS, nearly $156 billion of loans of eight banks are expected to be affected in the coming 12 months. Hurricane Harvey is likely to cause loan losses of around $600 million to $1.1 billion, while losses from Irma could range from $1.2-$1.9 billion.

Per the estimates of the analysts, the earnings per share (EPS) of banks like JPMorgan, Bank of America, Citigroup and Wells Fargo & Company WFC will likely drop by 1-2%.

EPS losses for Zions Bancorporation ZION are expected to range between 11-19%, while SunTrust Banks Inc. STI and Comerica Incorporated CMA are likely to see 6-10% drop in their EPS.

In fact, according to Bank of America, Harvey is likely to end up being the costliest natural calamity to date, which can lead to overall losses of as much as $108 billion for the entire economy.

Notably, global economist, Ethan Harris, wrote in a note that the hurricane is expected to impact economic growth for the third quarter, dragging it down by almost 40 basis points (bps) to 2.5%.

He wrote, "In the short-term, the hurricanes serve as a drag but ultimately history suggests the rebuilding efforts underpin growth."

Of the banks mentioned above, Zions Bancorporation sports a Zacks Rank #1 (Strong Buy) while Morgan Stanley carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research
<-- You can share this post with your network,
or give us your opinion and leave a comment.
Be sure to check our RSS feeds for updates.