U.S. banks may start preparing for higher loan losses in the coming quarters after plunging oil prices have made oil producers more likely to default on loans, analysts said.

    To prepare, banks are expected to set aside more money to cover bad loans, known as “provisioning,” when they post results in the next few quarters. Big U.S. banks start posting second quarter results this week, with JP Morgan Chase and Wells Fargo reporting tomorrow.

    The move will cut into earnings, and may be an early sign that credit quality among U.S. borrowers is no longer improving after the financial crisis, representing a shift in the credit cycle. Banks for years have been setting aside less and less money to cover credit losses, as companies and consumers defaulted less frequently on a wide variety of loans.

    Analysts cautioned that higher provisions do not necessarily imply that credit is broadly deteriorating.

    “We’re kind of trying to thread a needle here because on the one hand we don’t want to dismiss this situation but on the other hand this is not a catastrophic ‘oh my God here we go again,’” said Gerard Cassidy, analyst at RBC Capital Markets.

    There are some storm clouds in the global economy now, including slower growth in China and the threat of a Greek exit from the eurozone. Barclays Capital analyst Jason Goldberg wrote Friday that he sees little direct impact on U.S. bank loan books from those events.(SD-Agencies)