America’s big banks recorded a higher earning in the second quarter of the year due to consumer lending boost.
Several banks that focus on consumer operations, particularly lending, hit the sweet spot and are reaping the benefits. Wells Fargo drove a quarterly profit of $6.2 billion for this year’s second quarter, thanks to consumer lending via credit card, loans, and mortgages. JPMorgan Chase also witnessed an incredible profit increase by 1.07% as well as Citigroup Inc with a 0.54% increase.
Despite financial analysts’ predictions of lower bank earnings due to the economic slowdown brought about by the trade crisis, banks surprisingly have higher profits compared to last year.
The Wall Street Journal reports that American consumers are more ‘upbeat’ about the economy with low unemployment and lower interest rates on loans and mortgages. The increase in wages also contributes to the increase of consumer’s credit card spending as well as the application for new mortgages.
JPMorgan reported an 11% increase in card spending, which amounts to $157.6 billion. The bank indicates that the higher spending came from existing customers than the new accounts. Citigroup Inc., on the other hand, reported an 8% increase in the credit card transactions of its 35 million accounts in the US. For Wells Fargo with smaller credit card business, an impressive increase of 6% was recorded.
Meanwhile, business trading and deal fees largely dropped, which is the reason why Goldman Sachs Group Inc reported a lower profit in this year’s second quarter. Out of all the major banks, it is the only one with a lower profit than it did a year ago.
The deal and trade drop is a sign that corporate entities are still very much affected by how the US economy will respond to the ongoing trade war with China.