Higher interest rates leave more profits for US banking giants

Higher interest rates leave more profits for US banking giants

Banks have benefited from higher interest rates, increasing their interest earnings, that is, the difference between what they earn on loans and what they pay on deposits.

JPMorgan and Wells Fargo, the No. 1 and No. 4 U.S. lenders, respectively, also raised their net interest income forecasts.

However, banks remained cautious about the economic outlook.

“Today, American consumers and businesses remain healthy, even though consumers are spending their excess liquidity,” said Jamie Dimon, Chairman and CEO of JPMorgan.

Wells Fargo said it is seeing an increase in delinquency notices on its credit card portfolio.

“While the economy has continued its resilience, we are seeing the impact of the economic slowdown, with loan balances declining and delinquencies moderately deteriorating,” said Charlie Scharf, CEO of Wells Fargo.

Citi chief executive Jane Fraser said she was seeing a continued slowdown in spending, indicating an “increasingly cautious consumer”.

For its part, regional lender PNC Financial Services has reported higher rates of consumer loan delinquencies.

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