US banks report good earnings, but warn of hit if no more stimulus

Large US banks reported better-than-expected results on an improving economy, but cautioned that the recovery could falter if Washington fails to enact new stimulus measures.

"It's important and it needs to happen as quickly as possible," said Citi Chief Financial Officer Mark Mason, who added that massive spending from Washington has helped avert a tidal wave of delinquencies so far.

JPMorgan Chase executives warned of a "doubledip" recession if there is not another package. That takes place when a second period of economic contraction follows an initial recovery.

"The people we need to help the most are small businesses and the unemployed," said JPMorgan Chief Executive Jamie Dimon, who said Washington's actions will determine whether it needs to take much higher reserves for bad loans.

"If the better outcomes happen" with a good a stimulus package, "we are over reserved by $10 billion," he said. But if there is a doubledip recession, the bank could be "unreserved by $20 billion," Dimon added.

The comments came as both JPMorgan Chase and Citigroup released earnings that showed a big improvement from the last two quarters, when both companies set aside billions of dollars in reserves for bad loans in the wake of coronavirus shutdowns.

Earlier, G20 finance ministers and central bankers are set to hold talks aimed at spurring global recovery from a coronavirus-triggered recession while considering a proposal to extend debt relief for crisis-hit poor countries.

The virtual talks, hosted by current G20 president Saudi Arabia, come a day after the International Monetary Fund warned that global GDP would contract 4.4 percent in 2020 and the damage inflicted by the pandemic would be felt for years.

The meeting will "discuss updates to the G20 Action Plan-supporting the global economy through the COVID19 pandemic," G20 organisers said in a statement.

The group will also discuss "the progress made on the G20 Debt Service Suspension Initiative (DSSI) and its proposed extension into 2021," the statement added.

The 20 most industrialized nations had pledged in April to suspend debt service from the world's poorest countries through the end of the year as they faced a sharp economic contraction caused by the pandemic.

The World Bank and campaigners have called for the debt suspension initiative to be extended through the end of 2021, while charities such as Oxfam say it needs to be stretched through 2022.