Reuters has calculated the profits of the reclaimed economy by top US banks

By Michelle Price

WASHINGTON (Reuters) – The top four U.S. consumer banks released successful second-quarter results this week as pandemic loan losses did not materialize and the U.S. economy began to revive.

Wells Fargo (NYSE 🙂 & Co, Bank of America Corp (NYSE :), Citigroup Inc. (NYSE 🙂 and JPMorgan Chase & Co. (NYSE 🙂 combined $ 33 billion in profits as a result of the release of reserves set aside last year, which they feared could absorb pandemic losses.

That was above analyst estimates https://www.reuters.com/business/finance/us-banks-see-big-jump-2q-profits-before-results-return-normal-2021-07-08 $ 24 trillion combined, compared to $ 6 billion ago.

Consumer spending has risen, sometimes beyond pre-pandemic levels, credit quality has improved and savings and investment have increased, banks said.

Thanks to the government’s extraordinary incentives and holiday loan repayments, fears have not materialized. The national introduction of vaccines has allowed Americans to return to work and start spending again.

Strict capital market activity has also helped the largest U.S. banks Goldman Sachs Group Inc. (NYSE 🙂 reported $ 5.35 billion in profit, more than double the adjusted profit a year ago.

“The pace of global recovery is surpassing previous expectations and with it, increasing consumer and business confidence,” said Citigroup CEO Jane Fraser.

This was reflected in the collection of consumer loans.

For example, JPMorgan’s combined debit and credit card spending rose 22% compared to the same quarter in 2019, when spending patterns were more normal.

Wells Fargo has seen a 14% gain in credit card revenue compared to the second quarter of 2020 due to higher point of sale volume. Revenues rose slightly in the first quarter, the bank said.

Loan growth is still warm, although it was usually bad for bank profits, there were signs that demand was falling back.

Excluding loans associated with the U.S. government’s pandemic support program, Bank of America’s loan balances, for example, grew by $ 5.1 billion in the first quarter.

“Consumer spending has significantly exceeded pre-pandemic levels, deposit growth is high and lending levels have begun to grow,” said CEO Brian Moynihan.

JPMorgan, the country’s largest lender, reported $ 11.9 billion in profits on Tuesday compared to $ 4.7 billion last year.

Citigroup’s second-quarter earnings were $ 6.191 billion, up from $ 1.06 billion last year, and Bank of America’s earnings were $ 8.96 billion, up $ 3.28 billion.

Wells Fargo made a profit of $ 6 billion last year compared to a loss of $ 3.855 billion, mostly related to special items.

While the results indicate good trends for consumers and businesses, low interest rates, weak loan demand and slowing trade are likely to weigh on the results, analysts said.

The U.S. Federal Reserve remains adamant that it has a 2% inflation target and does not intend to tighten monetary policy, for example, by raising interest rates, Fed Chairman Jerome Powell said in remarks prepared in a congressional appearance Wednesday.

This suggests that banks will have to deal with low rates for a long time to come.