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Top Banks Report Earnings: The Money Sector Weighs In

August 02, 2017

  • Top banks reported sound second quarter earnings.
  • They’ve generally been benefitting from the improving financial picture of consumers since the recession.
  • Banks are also thriving on the expectation that Congress will soon eliminate regulations that require them to hold more cash in reserve.
2 min read

Let’s face it, we don’t spend a lot of our time thinking about banks.

Banks are where we go to deposit our paychecks, or take out money. We go there to get a credit card or mortgage, or to deal with our accounts. These days, many of us take care of financial matters from our phones, rarely paying a visit to a local bank branch.

Here’s the thing: Banks are critical to the economy. The top ten financial institutions in the U.S. hold assets worth nearly $12 trillion. And just four of those institutions hold the deposits of nearly half the nation’s consumers.

The banking sector is critical to consumers, as well as to businesses that depend on them to make deposits, or for loans and lines of credit. Banks earn money in a variety of ways, including from interest on loans, fees on accounts, and fees for stock and bond trading.

So when financial institutions report their quarterly earnings, which give a snapshot of a company’s financial health, it will provide you with a picture of how one of the economy’s most critical sectors is performing.

Bank of America, JPMorgan Chase, Wells Fargo, and Citibank, just reported their second quarter earnings.

How are banks doing?

The biggest banks in the U.S. had a relatively good second quarter, posting strong profit and revenue growth. Here are highlights for the top four banks:

So what’s going on?

After years of difficulties stemming from their involvement with the mortgage crisis, the banking sector appears to be on sound footing, according to financial analysts.

In late June, all of the major U.S. banks passed something called a stress test. This test was put in place at the height of the recession, when numerous banks ran out of money or became insolvent, to make sure that banks have enough cash on hand to weather another financial crisis.

Regulations requiring banks to keep a cash buffer, put in place through something called the Dodd-Frank Wall Street Reform and Consumer Protection Law, may also soon be repealed, which some financial analysts say could increase bank profits. Banks have also benefitted from the steadily improving financial picture of consumers as they’ve gotten on to more sound footing in recent years.

By Jeremy Quittner
Jeremy Quittner is the financial writer for Stash.

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