Experts are warning that U.S. economic growth may be easing. But as far as the country’s biggest banks are concerned, the recovery is going just fine.
Five of the nation’s biggest lenders — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Morgan Stanley — have beaten quarterly earnings expectations this week. Alongside solid profits, industry leaders provided rosy predictions for a continuing economic rebound from the pandemic, even in the face of continued uncertainty about the spread of the coronavirus, rising inflation and persistent supply-chain headaches.
“If you look at the economy, it’s improving, people are spending more and businesses are going to have to start investing,” Paul Donofrio, Bank of America’s chief financial officer, said on a conference call on Thursday. “We’re optimistic about the future.”
Earlier in the day, Bank of America, the country’s second-biggest lender, reported a profit of $7.7 billion for the three months that ended with September, as customers spent more on their credit and debit cards. That was up 58 percent from a year earlier, when the pandemic was surging and banks were still setting aside provisions to cover secured loans. Customers also keep paying their bills — the bank’s loss rates on loans have fallen near 50-year lows.
Although the bank made less money this year from interest paid by borrowers, it expects that income to bounce back in 2022 as the economy builds momentum, Mr. Donofrio said. But top bankers acknowledged that there could be bumps in the road ahead if borrowers held back.
“If you think about supply chains, where that impacts us mostly is constraining demand for credit or loans,” Michael P. Santomassimo, Wells Fargo’s chief financial officer, said on a conference call, also on Thursday. For instance, in commercial banking, “a lot of our clients just can’t get their factories moving in the way they want,” he said.
Inflation is keeping wages and commodity prices elevated, which can also constrain economic growth, Mr. Santomassimo added.
Source: nytimes.com
