WASHINGTON-U.S. Emagazine.credit-suisse.com/app/art … = 157 & lang = DE Banks have posted record quarterly earnings to start in 2018, showing newly released data, a result of the new tax code, rising interest rates and an improving economy. Englisch: emagazine.credit-suisse.com/app/art … = 263 & lang = en.
The industry, banks of global giants such as JPMorgan Chase & Co. and Tiny Community lenders, reported net income of $ 56 billion in the first quarter, an increase of 27.5 percent over the year-ago quarter, Federal Deposit Insurance said Corp. on Tuesday with. The new US tax bill gave the banks a boost, but profits would have been $ 49.4 billion without the US government. The previous record was second-quarter earnings of $ 48.1
This jump in profits, achieved through double jumps in trading and lending, helped banks exceed their cost of capital for the first time in more than a decade.
Banks' return on equity, at 11.44%, was at its highest level since 2007, but is still well below the 15% ceiling set in the late 1990s and early 2000s.
This is a strong indication that banks have managed to adapt their businesses to new regulations introduced after the 2008 financial crisis. They have also been supported by consumers and businesses who are both willing to borrow and repay their loans.
In fact, consumers and lowest-paid companies have been falling back on their bank debt for years. US bank lending fell to 1.34% in the first quarter, a low point after the crisis, according to the data.
The Fed's recent interest rate moves have been helpful to banks so far. Net interest income for banks rose 8.5% year-on-year to $ 131.3 billion. The average net interest margin was 3.32% after 3.19% in the previous year. This is the lowest margin since at least 2013.
This margin measures banks' credit income against what they pay to attract deposits. Some investors fear that banks will have to pass on higher interest rates to depositors faster than they can re-praise their loans or borrow new ones.
So far, however, depositors have been largely loyal, even to banks that pay little interest. While some interest rates, such as online savings accounts, are higher, the mega-banks that are increasing their deposits – like JPMorgan,
Bank of America
& Co. – are also those who pay some of the lowest interest rates to depositors.
"Large institutions have benefited more than municipal banks from rising short-term interest rates," said FDIC chairman
However, there are signs of problems with credit card lending. Net credit write-offs increased 16% year-over-year. Analysts and bankers have debated whether this is a blip or an early warning that consumers are overburdened. Bank credit card balance sheets fell 5% from the fourth quarter, the only major credit category to decline sequentially.
Beyond the cards, the FDIC said banks are generating more returns by taking longer-term loans, which are typically riskier. The likelihood that a negative event will occur over time has been worrying.
Loans and securities held by banks with maturities of more than three years amount to around 35% of the total assets of banks, the highest level in 20 years. The largest growth was achieved in loans maturing in more than 15 years.
"A prolonged period of low interest rates and an increasingly competitive credit environment has led some institutions to seek returns," Gruenberg said. "This has led to increased risk of interest rate risk, liquidity risk and credit risk."
The increase in trading revenues triggered by a surge in equity market volatility helped the industry.
Banks raised over $ 1 billion in trading revenues, up 15% to $ 8.2 billion, the highest level since the first quarter of 2009. Regulators are currently discussing whether to lift some of the trade restrictions on banks.