Bank profits are soaring after tax cuts

Bank profits jumped by 25% in the second quarter, mostly because of the lower rates due to tax cuts, according to an analysis released Thursday.

The Federal Deposit Insurance Corp. reported a net income of $60.2 billion during the three months ended June 30 for the more than 5,500 banks whose deposits it guarantees.

The profit rise from banks including Bank of America BAC, -0.68% , Citi C, -0.48% and JPMorgan Chase JPM, -0.33%  would still have been 11.7% even if the effective tax rate were the same, the FDIC said.

Net interest income totaled $134.1 billion, an increase of 8.7%, and the $10.7 billion increase was the largest annual dollar increase ever reported by the industry. That came as the gains in average yields offset the increase in funding costs — a way of saying, that the banks have been slow to increase deposit rates.

Loan-loss provisions as a percentage of net operating revenue fell to 5.8%, the lowest level since third quarter 2015.

Noninterest income on items like service charges and transaction fees grew just 2%, while noninterest expenses grew 4.6% amid rising salaries.

Declared dividends totaled $37.8 billion, an increase of $9.5 billion, or 33.4%.

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