Big Banks Smash Earnings Records, but ‘Tectonic’ Risks Loom
The largest banks in the United States collectively raked in tens of billions of profits in the second quarter, despite the war in Iran and persistent inflation.
In a world of uncertainty, one reliable rule is that Wall Street will find a way to make money.
That was underscored with emphasis on Tuesday when four of the largest banks in the United States reported a collective $43 billion in profits in the second quarter, smashing records and exceeding analysts’ projections, despite the war with Iran, stubborn inflation and mounting concerns about the staying power of the artificial intelligence boom.
JPMorgan Chase earned $21 billion in the quarter, up more than 40 percent from the same period a year earlier — a jump that could be partly credited to a $4.6 billion gain on its stake in the credit card company Visa.
JPMorgan, along with rival Goldman Sachs, which logged $6.6 billion in profits during the quarter, was also bolstered by higher fees in investment banking during a boom in mergers and acquisitions and a hot string of financing deals for A.I. companies.
Bank of America made $9 billion, fueled by trading gains and investment banking fees. And Wells Fargo turned a profit of more than $6 billion, as consumers and businesses borrowed more.
Even as more households struggled to keep up with rising costs for essentials like gas and groceries, banks profited from fairly low delinquencies on debts and from interest rates that analysts now expect to stay higher for longer.
Jamie Dimon, JPMorgan’s chief executive, said in a statement that the U.S. economy “demonstrated notable resiliency this year, with stronger business investment and hiring.” He also warned of “risks shifting below the surface like tectonic plates, including geopolitical tensions and wars, sticky inflation, large global fiscal deficits and elevated asset prices.”
Bank of America had one of its best quarters ever, which Brian Moynihan, the bank’s chief executive, attributed to a “healthy economic backdrop” and “resilient” consumer and business clients. The bank’s earnings per share rose more than 30 percent from a year ago.
Charlie Scharf, Wells Fargo’s chief executive, noted “concerns” around affordability and inflation, but said those were being offset by strong employment numbers and wage growth. For banks, times are good: “We know that such favorable conditions do not go on forever, so we are being selective about how much and where to grow,” he said.
The bank results are the unofficial start of quarterly earnings season, in which the largest publicly traded companies offer updates on their finances to the public. That tradition is now under pressure as the Trump administration’s securities regulators have proposed ending the mandate for quarterly reports and instead requiring semiannual reports.
The major banks, whose results are particularly closely watched because they offer hints on consumer and business spending across the economy, have said they will continue reporting quarterly regardless.
Rob Copeland is a finance reporter for The Times, writing about Wall Street and the banking industry.
Stacy Cowley is a Times business reporter who writes about a broad array of topics related to consumer finance, including student debt, the banking industry and small business.
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