Major US banks, including JPMorgan, Wells Fargo, Citigroup (NYSE:C), and PNC Financial (NYSE:PNC) Services, reported increased profits on Friday due to the higher interest rates applied to loans. Both JPMorgan and Wells Fargo, the first and fourth largest US lenders respectively, recorded profit increases of 35% and 60% year-on-year. JPMorgan's CEO attributed part of this success to "over-earning" on net interest income (NII).
The NII, which is the difference between the interest earned on loans and the amount paid out on deposits, also saw a significant increase. JPMorgan's NII rose by 30%, while Wells Fargo's increased by 8%. This positive trend was reflected in the KBW index of bank shares, which rose by 1.1%, and in the increased value of JPMorgan and Wells Fargo shares.
However, not all news was positive. Wells Fargo reported a decline in loan balances as customers depleted their savings. The bank also noted an increase in charge-offs in its credit card portfolio. Citigroup reported a modest profit gain of 2% but highlighted a continued slowdown in spending.
PNC Financial Services reported a drop in profit of 4.26% to $1.57 billion. The bank also experienced a 2% NII decline, increased funding costs, and a decrease in average deposits. However, despite these challenges, it was noted that bank deposits have generally stabilized across the sector.
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