The largest US banks are expected to record the biggest increase in loan losses since the start of the Covid-19 pandemic when they start publishing their second quarter results later this week.

JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley are expected to have written off a collective 5 billion dollars in defaulted loans in the second quarter of this year, according to the average estimates of banking analysts compiled by Bloomberg.

According to analysts' forecasts, banks will set aside an additional 7.6 billion dollars to cover loans that could go into default.

Both figures are almost double those recorded in the same quarter a year ago. However, they are still lower than the losses the big banks suffered at the start of the pandemic, when write-offs and provisions peaked at six billion dollars and 35 billion dollars respectively.

Credit cards are the biggest source of losses for a number of lenders, while commercial real estate loans are also hampering banks' performance.

JPMorgan, Citi and Wells Fargo report their results on Friday, followed by BofA and Morgan Stanley on July 18 and Goldman Sachs on July 19. (FT)