Some of the Big U.S Banks Note a Rise in Bad Loans
Some of the Big U.S Banks Note a Rise in Bad Loans

Bad loans to companies had a steep climb to 67 percent at three of the largest American banks in Q1. It marks the most recent sign that corporate credit quality is wearing away with continued drop in energy prices.

Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co., saw their bad loans rise to the highest levels in almost three years. According to the executives, currently the weakness is restricted to oil, gas and the connected industries.

Since June 2014, the U.S. crude has slipped sixty percent or more but since February got some relief with an upward move.

Though the risk of troubled loans greatly declined at big banks for years and for JPMorgan and Bank of America, it is lower than one percent of their total assets but James Elder, who is a director in corporate and financial institutions at Standard & Poor's said this week that signals are surfacing that default risk is on the rise in other sectors apart from the energy sector, including health care.

However, some of the analysts think that the current problem is limited to oil gas and related industries.