US banks rake in billions in third quarter

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Charlotte/San Francisco – Some of the biggest US banks reported billions in third-quarter profits despite uncertainty surrounding monetary policy and overall trading volatility, as earning statements reflected Wednesday.

The banks took different routes to profitability between July and September. Questions about when the US Federal Reserve will raise its benchmark interest rate combined with China’s stock market correction made for a turbulent three months.

Bank of America, the second largest US bank, reported third-quarter profit of 4.5 billion dollars, though its revenue sank 2.4 per cent to 20.9 billion dollars.

In the same quarter a year ago the bank took a loss of 232 million dollars after agreeing to a 16-billion-dollar settlement for suspect mortgage practices related to the 2008 financial crisis – a legacy liability the bank incurred through its acquisition of mortgage firm Countrywide.

While Bank of America took in less in securities trading and investment banking, overall profit for the quarter reflected its much diminished litigation expenses and other cost cutting. Expenses overall were down 31 per cent.

Bank of America chief Brian Moynihan called the numbers “solid results.”

Wells Fargo, the largest mortgage lender by volume in the United States, and fourth largest bank overall, saw its profit rise 1.2 per cent to 5.8 billion dollars. Total revenue was up 3 per cent to 21.9 billion dollars. The bank expanded its loan and deposit business and profited from higher interest income.

The largest bank in the US, JPMorgan Chase, saw net income jump 22 per cent in the third quarter to 6.8 billion dollars, it reported Tuesday. The leap was due in large part to 2.2 billion dollars in tax benefits due to resolution of tax audits.

Overall the bank saw a 6-per-cent downturn in revenue compared to the previous year to 23.5 billion dollars.

“We had decent results this quarter,” JPMorgan chief Jamie Dimon said. The overall lower revenue reflect a challenging global marketplace and lower interest rates.

The US banking industry is bracing for the US Federal Reserve to begin hiking its prime interest rate, which has been at an unprecedented near-zero level since December 2008. The first tightening of monetary policy could come as soon as October 28.

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