Bank of America could be hit with a whopping $111 billion in unrealized losses by the end of 2024. This is according to a recent report, which highlights the impact of rising bond yields on the bank’s balance sheet.
Unrealized Losses on the Rise
The bank’s losses, primarily stemming from US agency mortgage-backed securities, are expected to surge by 29% from the previous quarter. As of the third quarter of 2024, Bank of America already had $86 billion in unrealized losses on its $568 billion in held-to-maturity assets. The rising yield on 10-year US Treasuries, nearing 5%, is a major factor driving these losses. Since most of Bank of America’s held-to-maturity debt is in agency mortgage-backed securities, which are also seeing rising yields, the problem is amplified.
Industry Comparison and Broader Context
Bank of America’s potential losses are significantly higher than those of other major banks. For instance, JPMorgan Chase, the nation’s largest bank, reported around $20 billion in unrealized losses in the third quarter of 2024. The Federal Deposit Insurance Corporation (FDIC) also noted a concerning trend: the number of troubled US lenders increased to 68 in Q3, with total unrealized losses across major banks reaching $364 billion.
Disclaimer: This information is for general knowledge and shouldn’t be considered investment advice. Always do your own research before making any investment decisions.
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