America’s biggest banks just reported blockbuster earnings in their last quarter.
They’re benefitting from volatile trading markets and increased interest rates, while millions of Americans feel the financial squeeze of costly credit cards, record-high mortgages, and a slosh of personal loans.
It also comes as Americans pay an invisible tax of yet-again rising inflation. Yesterday, consumer prices ticked up to 2.7 percent, which was the highest since February.
Financial giants — including JPMorgan, Citigroup, PNC, and Bank of America — all beat second-quarter profit expectations this week.
In their reports, each pointed to rising interest income and surging trading revenue as major profit drivers.
Americans have been tapping and swiping their credit cards at an increasing clip. This has led to an invisible tax to service their record-high prices on homes, student loans, and new vehicles.
That mix has slapped an $18.2 trillion price tag on consumer debt in the US, with the average household owing more than $80,000.
Each time Americans take out money, financial institutions will collect interest on that debt.
Americans have a record amount of debt sloshing around the US economy – and banks just reported better-than-expected profits on interest payments
Those interest payments are a bonanza for Wall Street.
Bank of America led the charge with $7.1 billion in profit, driven by a record $14.7 billion in net interest income and a 15 percent jump in trading revenue.
‘Consumers remained resilient, with healthy spending and asset quality, and commercial borrower utilization rates rose,’ the bank’s top boss, Brian Moynihan, said.
‘In addition, we saw good momentum in our markets businesses.’
That profit boom comes as the Federal Reserve continues to hold interest rates above 4 percent, a move meant to tame inflation.
Interest rates set by America’s Central Bank heavily influence how much consumer banks charge for debt, and also keeps borrowing costs sky-high for consumers.
Experts tell DailyMail.com will likely keep the Central Banks lending rate higher.
JPMorgan and Citi also reported earnings growth driven by the same trends: bigger returns from customer loan payments and a strong quarter for their trading desks.
Wall Street’s trading floors at these banks have maintained a hot streak, as volatile markets triggered by tariffs, geopolitical conflicts, and economic uncertainty caused a surge in institutional trading.
The banks — which collect fees for helping clients buy and sell stocks, bonds, currencies, and commodities — are seeing better-than-expected returns from their capital markets businesses.
Goldman Sachs’ profit jumped 22 percent in the second quarter, largely because of the market turbulence.
