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📝Banks Expect Continued Normalization Of Credit Losses: Deutsche Bank

In general, banks expect continued normalization of credit losses in 2024. Credit card losses are expected to be higher than 2019 levels seemingly due to some laxing of underwriting standards in 2021/2022 related to a combination of government stimulus, pauses to certain debt payments and FICO creep.

Card loss guidance is higher than 2019 at C and JPM. Other banks didn't guide on card losses. The higher outlook for credit card losses is a key driver in our higher 2024 charge-off assumptions (vs. 2019) at BAC, C, and JPM. The increase at WFC (DBe 2024 vs. 2019) reflects both higher card and CRE losses (driven by office). In 2024 loss guidance in the same ballpark as 2019 for most large regionals we cover.

Mgmt guidance is higher at CFG and MTB, driven by higher CRE losses. - Deutsche Bank



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