Ordeal by Roses, US bank worries, Gazprom's losses, misfiring missiles & Bismarck's legacy

Great reading, links and images from Chartbook Newsletter by Adam Tooze

Feb 21, 2024

Eikoh Hosoe Ordeal by Roses #06 Source: Guardian

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US banks - commercial real estate loss provisions

The average reserves at JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley have fallen from $1.60 to 90 cents for every dollar of commercial real estate debt on which a borrower is at least 30 days late, according to filings to the Federal Deposit Insurance Corporation. The sharp deterioration took place in the last year after delinquent commercial property debt for the six big banks nearly tripled to $9.3bn. Michael Barr, who oversees bank supervision at the US Federal Reserve, said on Friday that regulators “have been closely focused on banks’ CRE lending”, including “how they are reporting their risk” internally and whether they “provision appropriately and have sufficient capital to buffer against potential future CRE loan losses”. Across the wider US banking sector the value of delinquent loans tied to offices, malls, apartments and other commercial properties more than doubled last year to $24.3bn, up from $11.2bn the year before.

Source: FT

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US banks - lending to non-banks

In 2010, when banks were first required to break out their lending to non-banks, the loans totalled just over $50bn for the entire banking sector. JPMorgan alone now has twice that in loans to non-banks. For all banks, shadow bank financing now makes up more than 6 per cent of all loans, putting it just above auto loans at 5 per cent, and just below credit cards, which crossed $1tn for the first time just last year, at 7 per cent.

Source: FT

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Facing the EV reckoning: in Europe

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Facing the EV reckoning: USA

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Gazprom pays the bill

Gazprom has become one of the Ukraine war’s biggest corporate casualties. “Gazprom understands that it will never again have as big and fat a slice of the pie as Europe, and it simply has to accept that,” said Marcel Salikhov, head of the Institute for Energy and Finance, a Russian think-tank. “The only way forward now is to look for relatively smaller sources of revenue and gradually develop them, gathering crumbs.” In an interview with state television channel Rossiya 1 on Sunday, Putin admitted Russia had previously profited more from exporting energy, but denied the loss of business was causing problems. “Maybe it was more fun [previously], but on the other hand, the less we depend on energy, the better, because the non-energy part of our economy is growing,” he said. While Moscow decided early in the war to slash gas supplies to Europe, a move that initially boosted prices enough to offset the slump in exports, the effect was shortlived. Pre-tax earnings hit a record Rbs4.5tn ($49.7bn) in the first six months of 2022 but slumped 40 per cent to Rbs2.7tn a year later, while net profits slid from almost Rbs1tn to Rbs255bn. Researchers at the state-controlled Russian Academy of Sciences have even predicted the company’s full-year 2023 results will show it has ceased to be profitable, and that net losses could hit Rbs1tn by 2025.

Gazprom’s oil business, Gazprom Neft, has become the company’s main lifeline, contributing 36 per cent of revenues and 92 per cent of net income in the first half of 2023. The division’s market value even surpassed that of its parent company last year.

Source: FT

Trucks headed North

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Eikoh Hosoe. Ordeal by Roses #29. 1961