4 banks account for 45% of the profits of the American banking sector in the third quarter of 2023
Profits of 4 American banks jump 23% and other institutions decline 19%
Shrouq
Four US banks accounted for nearly half of the country's total banking profits during the third quarter of this year, highlighting their growing advantage and that they will be the most popular as interest rates continue on an upward trend.
According to the Financial Times newspaper, today, Saturday, November 11, 2023, the profits of JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup jumped by 23%, according to “Reg Data Bank,” which collects quarterly reports on banks. It is submitted to the Federal Deposit Insurance Corporation.
Number of banks in America
These results are not evidence of the strength of the banking sector in the United States of America, because out of nearly 4,400 banks in the country, the four largest banks achieved a share of about 45% of the total bank profits in the last quarter of the current year, and this percentage is higher than the rate achieved previously. By about 35% a year ago, well above the 10-year average of 39%.
According to the British newspaper, profits in all other institutions decreased by an average of 19% in this quarter, which is their largest decline since the first months of the Corona virus epidemic crisis - Covid 19.
Alexander Yocum, a banking analyst at CFRI Research, said: “The big banks were not pressured or withdrawn on deposits, so their profits grew, while the situation changed in the smaller banks, which were hit hard by the continued rate hikes, and were unable to keep up.”
Overall, banking sector profits fell by 5% during the third quarter, and this decline can be attributed to a decline in lending and bond market investments, as well as a 260% increase in mainly interest costs, which is what banks must pay to depositors to prevent them from searching for... A better deal elsewhere, according to Rig Data Bank.
Silicon Valley
Profits of the American banking sector reached their highest levels ever at $80 billion during the first quarter of this year, an increase of 33% over last year, despite the turmoil the sector witnessed early in the year.
About half of this increase in sector profits came from one-time gains recorded by First Citizen and Flagstar, after they acquired the assets of Silicon Valley and Signature banks.
The two sale deals came after US regulators took control of Silicon Valley and Signature banks last March, weeks after their value declined at that time as depositors fled for fear of financial pressure on them.
However, the sharp increase in profits reflected that large US banks benefited from higher interest rates, lower loan defaults, and an expanding labor market during that period.
