Economic recovery brings leaps in profits for US banks

New York / Charlotte (dpa) – The recovery of the US economy from the Corona crisis is driving large US banks to jump in profits.

Bank of America and Wells Fargo, among others, benefited in the third quarter of the reversal of provisions that they had set up in the pandemic year 2020 for possible loan defaults. Because when the economy picks up, it is foreseeable that not as many loans will default as had been feared.

The money houses Morgan Stanley and Citigroup also increased their profits significantly. The day before, the largest US bank, JPMorgan, reported a jump in profits.

Bank of America released provisions for loan losses of 624 million US dollars in the summer (539 million euros), as she announced in Charlotte. A year earlier, she had put $ 1.4 billion into loan loss provisions. Because the income was now bubbling stronger, the surplus jumped by 58 percent to 7.7 billion dollars.

The income – so the total income of the bank – put 12 percent to 22, $ 8 billion too. This was not least due to the investment banking: Here fee income rose by percent to 2.2 billion dollars and thus almost reached a record level.

Morgan Stanley also profited from investment banking and asset management in the months of July to September. Profit rose year-on-year by a good 36 percent to $ 3.7 billion. Income increased by a quarter to a good 14 $ 7 billion. The financial group recently played the boom in IPOs, mergers and takeovers in the cards, on which banks earn well through fees. In investment banking alone, revenues shot up by a good two-thirds to $ 2 85 billion dollars.

Citigroup increased its profits by almost half to 4 . $ 6 billion. The total income remained with 17, 2 billion dollars practically at the previous year’s level, as Citigroup announced in New York. However, revenues from trading in fixed-income securities and shares increased. Citigroup was also able to release provisions for impending loan losses, which drove profits up. Because the bank’s earnings fell year-on-year by 2.5 percent to 17, 8 billion dollars. However, the institute released provisions for impaired loans in the amount of $ 1.4 billion. A year earlier, Wells Fargo had set aside nearly 770 million dollars on loan defaults. The institute’s profit jumped 59 percent year-on-year to $ 5.1 billion.

Meanwhile, Wells Fargo’s scandal over bogus account openings hit negative again – this time with 250 million dollars. The money house had 2016 admitted that for years employees had opened bank and credit card accounts on a large scale that were not authorized by customers. The affair has already cost the bank more than 5 billion dollars.

On Wednesday, the largest US bank JPMorgan Chase had a profit jump of almost a quarter to 11, $ 7 billion reported.

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