A report in the Financial Times finds that analysts are projecting $3 billion in write-downs between leveraged loans and mortgage-related losses at JPMorgan and Bank of America. Both are the two largest banks (investment and otherwise) that have yet to visit what many have taken to calling the "confessional" for the third quarter earnings period. Reuters reports:
JPMorgan is likely to report mark-to-market losses on leveraged loans of about $1.4 billion and an additional $700 million in write-downs of mortgages and mortgage-backed securities, according to Howard Mason, analyst with Sanford Bernstein, the paper reported. Mason estimated Bank of America will take write-downs of $700 million for leveraged loans and mortgage write-downs of $300 million, the paper said.
That would equate to total mortgage-related losses of $1.4 billion. Not too bad, actually, when you consider that Citigroup said it would write down an expected $1.3 billion on mortgage-backed losses alone; and UBS said it expects to write down $3.4 billion in RMBS losses. We'll have to wait for formal clarification, of course, but I think it's entirely possible the analyst cited by the Financial Times might actually be too optimistic here.