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'It's going to be really ugly.' Here come the big bank earnings

July 13, 2020. Summarized by summa-bot.

A pedestrian wearing a protective mask walks past a boarded up Citigroup Inc. Citibank branch in Washington, D.C., U.S., on Thursday, June 4, 2020. Mayor Muriel Bowser lifted the curfew in D.C. for Thursday, the Washington Post reported. Photographer: Andrew Harrer/Bloomberg via Getty Images

Mass unemployment. Surging bankruptcies. An unprecedented health crisis. And near-zero interest rates. It's a depressing time for America's banks -- and Wall Street is bracing for huge profit plunges when they report results this week.

Wells Fargo (WFC) is likely to slash its coveted dividend and announce the scandal-ridden bank's first quarterly loss since the financial crisis.

The biggest driver of shrinking profits -- or outright losses, in Wells Fargo's case -- is the fact that banks are preparing to deal with a pile of toxic loans caused by the pandemic.

During the first quarter, Bank of America (BAC), JPMorgan, Citi, Wells Fargo and US Bancorp (USB) have collectively set aside an additional $35 billion to cushion against loans that go bust.

S&P Global Ratings warned last week that banks around the world will ultimately suffer credit losses of about $2. 1 trillion between this year and next.

Among the big banks, Wells Fargo is the biggest loser, with its stock down a whopping 54% so far this year.

Indeed, Wells Fargo is the only major bank expected to swing to a loss during the second quarter, a point that underscores just how much it was struggling even before the pandemic.

Wells Fargo isn't the only big bank with a shrinking stock price.

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