Wall Street earnings to fall sharply as pandemic-era reserves run dry

Big banks are expected to report declines of at least 40% in quarterly earnings this week, as the twin shocks of war and rising interest rates force lenders to build up reserves spent down last year.

After a phenomenal 2021, business on Wall Street has slowed dramatically while appetite for mortgages and other loans has fallen. Analyst Gerard Cassidy of RBC Capital Markets said banks are preparing to grapple with a surge in delinquencies and defaults as borrowing costs rise.

“We expect loan-loss provisions to be higher,” Cassidy said in a report Monday.

Bank earnings got a huge boost last year when Covid-19 eased its grip and

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