Big banks profit off higher interest rates, bank failures
The reality of rising interest rates and the recent collapse of Silicon Valley Bank and Signature Bank serve as a testament to the period of uncertainty and volatility in which the U.S. economy currently stands. That said, some of the country’s banking giants stand to benefit and are posting massive profits.
Announced in an article from the Associated Press, JP Morgan Chase has posted first-quarter profits that are up 52%. Deposits have grown noticeably, up $37 billion during the quarter to reach $2.4 trillion, as businesses withdraw from smaller banks in favor of the stability of larger ones, deemed by some, “too big to fail.” Moreover, the continual increase of interest rates has allowed banks to charge customers more for loans.
Another Associated Press update discusses Wells Fargo’s recent $5 billion earnings over the three-month period that culminated March 31. The bank posted revenue of $20.7 billion, well ahead of its $17.7 billion first quarter last year.
The position of big banks at this time may prove a source of stability, not only for their own customers, but also for other banks. Both JP Morgan Chase and Wells Fargo, among others, recently came to the aid of First Republic Bank with $30 billion in deposits that have prevented a third bank failure, at least so far.