NEW YORK–The biggest U.S. banks are reporting a banner year for profits during 2018.
JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley brought in more than $120 billion combined in profit last year, much of it the result of corporate tax cuts and a booming economy, according to newly released figures.
Nevertheless, the profits have not buoyed the stock prices of most banks, many of which had a “dismal 2018, weighed down by concerns about rising interest rates, the shrinking difference between short-term and long-term bond yields, and global issues such as trade and Brexit,” reported CNNBusiness. “But fears about slowing economic growth ahead take focus off what's happening right now: American banks are making more money than ever.”
As is the case with credit unions, one area that's being closely watched is how rising interest rates will affect banks, reported CNNBusiness.com. But the spread between loan earnings and deposit costs was better than expected last quarter, Fred Cannon, director of research at Keefe, Bruyette & Woods, told CNNBusiness.
Deposit Costs Rise
"Deposit costs are rising," he was quoted as saying. "But they didn't go up quite as much as people expected."
Trading revenue and bond trading did not generate the kinds of profits many of the banks had expected.
The banks reported loan growth had been generally solid, and that market volatility has played a role in banks keeping some loans in their portfolios they would otherwise sell off, noted Cannon.