By Pritam Biswas and Prakhar Srivastava <\/p>\n
Oct 13 (Reuters) – US banks reported solid loan and deposit growth in the third quarter, but lenders are paying a premium to retain customer funds in a fiercely competitive, high-interest-rate environment. <\/p>\n
JPMorgan Chase, \u200cCitigroup and Wells Fargo all posted higher net interest income on Tuesday, even as investors worried that soaring bond \u200cyields and elevated borrowing costs would stifle loan demand and trigger a flight of deposits. <\/p>\n
Bank of America, the second-largest US lender, also reported higher net interest income \u200bon Wednesday. <\/p>\n
“The economic uncertainty that prevails and the geopolitical instability are always present, but what our clients are actually doing is continuing to point to a resilient and growing economy in the United States,” Bank of America CEO Brian Moynihan said on a conference call with analysts. <\/p>\n
Citigroup reported an 11% increase in average deposits and a 12% jump in average loans. Wells Fargo said average deposits rose 10.7%, alongside \u200can 11% jump in average loans buoyed by \u2060its consumer banking division. JPMorgan, the largest US lender, reported a 4% rise in average deposits and a 2% increase in loans from a year ago. <\/p>\n
Bank of America’s average deposits rose 2% in the \u2060third quarter while average loans and leases grew 6% over the year-ago period. <\/p>\n
Despite resilient metrics, banks face mounting funding pressures. As US Treasury yields jumped in the third quarter, customers sought better returns elsewhere, forcing lenders to raise deposit rates to prevent outflows and squeezing their margins. <\/p>\n
This was \u200bexemplified \u200bby JPMorgan’s deposit margin that fell to 2.78% in the third quarter \u200bfrom 2.79% in the year-ago period and Wells Fargo’s \u200cnet interest margin on a taxable basis that slumped to 2.43% in the reported quarter from 2.61% a year earlier. <\/p>\n
“Loan and deposit growth continue to chug along, albeit maybe with some concern on deposits,” said Truist analyst Brian Foran. <\/p>\n
POTENTIAL CREDIT LOSSES IN FOCUS <\/p>\n
So far, analysts said there have been no significant cracks in overall bank credit quality, suggesting households have continued to manage their debt obligations. <\/p>\n
A weakening labor market and rising living costs could pressure borrowers, especially if prolonged conflicts drive up prices for essential goods and squeeze \u200cdiscretionary spending. <\/p>\n
Despite concerns that rising consumer spending is merely a reflection of inflation \u200bcrowding out non-essential purchases, internal data does not show consumers shifting away from \u200bdiscretionary items, JPMorgan Chief Financial Officer Jeremy Barnum said \u200bon a call with analysts. <\/p>\n
US consumer prices rose 3.4% in the 12 months through August, matching July’s \u200cincrease, while a measure of underlying inflation posted its largest \u200bmonthly gain in four months. <\/p>\n
US \u200bjob growth slowed more than expected in September. Sharp downward revisions to payrolls in previous months added to uncertainty about the economic outlook and the potential strength of future loan demand. <\/p>\n
Wells Fargo and Citigroup increased their provisions for credit losses \u200bin the third quarter, a trend the other \u200cbanks might soon follow in the current macroeconomic landscape. <\/p>\n
In September, major US banks raised their prime lending rates following \u200bthe Federal Reserve rate hike that raised borrowing costs for consumers and businesses. <\/p>\n
(Reporting by Pritam Biswas and Prakhar \u200bSrivastava in Bengaluru; Editing by Pooja Desai, Nick Zieminski, Rod Nickel) <\/p>\n","protected":false},"excerpt":{"rendered":"By Pritam Biswas and Prakhar Srivastava Oct 13 (Reuters) – US banks reported solid loan and deposit growth…\n","protected":false},"author":2,"featured_media":646528,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[6638,114,357,184,268,13368,85,4141,13516,9445,46,2450,8553,9331,266,13517,4861,688,5615,13369,13370,5268,13518,270,13519],"class_list":["post-646527","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-401k","tag-business","tag-business-news","tag-economy","tag-finance","tag-financial-information","tag-il","tag-investing","tag-investment-tools","tag-investor","tag-israel","tag-market-news","tag-mortgage","tag-mutual-funds","tag-personal-finance","tag-quote","tag-real-estate","tag-retirement","tag-stock","tag-stock-research","tag-stock-valuation","tag-stocks","tag-suze-orman","tag-tax","tag-track-portfolio"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/646527","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=646527"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/646527\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/646528"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=646527"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=646527"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=646527"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}