Despite the crisis, US banks made record profits in the 1st quarter

In the first quarter, the profit of the US banking sector reached an all-time high of about 80 billion dollars, even despite the banking crisis.

It is reported Financial Times.

Profits rose 33% year-over-year even as the industry grappled with the fallout from two bank failures and the worst stress since the 2008 financial crisis.

About half of the increase in overall industry earnings came from one-time gains recorded by First Citizens and Flagstar, which bought the remnants of Silicon Valley Bank (SVB) and Signature Bank, respectively, after they were seized by regulators and sold at a discount in March.

Even so, the jump in earnings also showed that US banks generally benefited from rising interest rates, low loan defaults and an expanding labor market, despite jitters among depositors and investors.

Of the nation’s nearly 4,400 banks, only 197, or less than 5 percent, reported losses in the first quarter, according to BankRegData, which compiles quarterly lender reports to the Federal Deposit Insurance Corporation.

JPMorgan Chase, the nation’s largest bank by assets, posted the highest profit of any lender, earning $11.7 billion from operations including lending and payment processing, compared with $6.4 billion in the same three months a year earlier. That figure doesn’t take into account the profits made by JPMorgan that don’t flow through its entity, which is regulated by the Federal Deposit Insurance Corporation.

PacWest Bank lost $1.2 billion – the most of any other lender in the first three months of 2023. Silvergate Bank, which lost $538 million to PacWest alone, announced it was closing in early March.

Economic truth