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Reuters, WASHINGTON, July 14 – After pandemic loan losses failed to materialize and the US economy began roaring back to life, the four largest U.S. consumer banks reported record second-quarter results this week. Wells Fargo & Co (WFC.N), Bank of America Corp (BAC.N), Citigroup Inc (C.N), and JPMorgan Chase & Co (JPM.N) all made a profit of $33 billion, boosted by the release of reserves set aside last year to cover projected pandemic losses. This was well beyond expert expectations of over $24 billion combined, compared to $6 billion the year before. According to the banks, consumer spending has increased, sometimes exceeding pre-pandemic levels, as credit quality has recovered and savings and investments have increased. Feared losses have not materialized as a result of significant government stimulus and loan repayment holidays. A nationwide immunization campaign has allowed Americans to return to work and begin spending again. The top US banks have also benefited from the hot capital markets, with Goldman Sachs Group Inc (GS.N) posting a $5.35 billion profit, more than doubling its adjusted earnings a year ago. find out more “The pace of global recovery is outpacing forecasts, and consumer and corporate confidence is rising along with it,” Citigroup CEO Jane Fraser said. Consumer loans increased as a result of this. JPMorgan’s aggregate debit and credit card spending, for example, was up 22% from the same quarter last year, when spending patterns were more regular. find out more Due to increasing point-of-sale volume, Wells Fargo saw a 14 percent increase in credit-card income in the second quarter of 2020. According to the bank, revenue increased slightly over the previous quarter. find out more While loan growth remains sluggish, which is often bad for bank earnings, there are hints that demand is returning. Loan balances at Bank of America, for example, increased $5.1 billion over the first quarter, excluding loans tied to the US government’s pandemic aid program. find out more In a statement, Chief Executive Officer Brian Moynihan said, “Consumer spending has largely exceeded pre-pandemic levels, deposit growth is healthy, and loan levels have begun to climb.” JPMorgan Chase & Co., the country’s largest bank, announced profits of $11.9 billion on Tuesday, up from $4.7 billion the previous year. Citigroup’s earnings increased to $6.19 billion in the second quarter, up from $1.06 billion the previous year, while Bank of America’s profit increased to $8.96 billion from $3.28 billion. find out more Wells Fargo made a $6 billion profit, compared to a $3.85 billion loss the previous year, which was mostly due to special items. While the statistics show positive trends for consumers and businesses, analysts predict that low interest rates, sluggish loan demand, and a slowdown in trading will impact on future outcomes. Fed Chair Jerome Powell said in prepared remarks for a congressional appearance on Wednesday that the US Federal Reserve is maintaining the course, with an inflation target of 2% and no intentions to tighten monetary policy by raising interest rates, for example. find out more This implies that banks will have to live with low rates for a long time. Michelle Price contributed to this report.
Lauren Tara LaCapra and Nick Zieminski edited the piece.
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