The big American banks are benefiting enormously from the lively start of the economy after the corona pandemic.

Bank of America, Citigroup and Wells Fargo reported on Wednesday, like JP Morgan and Goldman Sachs before, that they were able to release loan loss provisions a year ago in the lockdown for loans at risk because the risk of loan defaults has decreased.

The International Monetary Fund expects the USA to grow by 7 percent, the strongest economic growth in more than 20 years, thanks in part to strong government stimuli.

Hanno Mußler

Editor in business.

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The US banks' quarterly profits received an additional boost as credit risks dwindled. Bank of America (BofA) and Citigroup (Citi) released $ 2.2 billion and $ 2.4 billion in loan loss provisions, driving BofA's quarterly earnings to $ 9.0 billion and Citis to 6.2 billion Billion dollars increased sixfold. On Tuesday, the largest US bank, JP Morgan, announced a quarterly profit of $ 11.95 billion and Goldman Sachs announced $ 5.49 billion, which in both cases means that profits have roughly doubled compared to the same quarter of the previous year.

But the current quarterly bank balance sheets also have their downsides. The boom in the bond business is obviously over. Some corporate customers who, while struggling for liquidity in lockdown, sought investment advice from banks for the sale of new bonds a year ago, are now only partially asking for new loans. Consumers are increasingly financing their lively demand for rental cars with credit card loans. However, interest rates are currently less attractive for banks. This is one of the reasons why BofA's group earnings fell by 4 percent and Citis even by 12 percent. In contrast, BofA's costs rose by a significant 12 percent, also because it paid its 140,000 employees higher wages and bonuses.

An Achilles heel of US banks in the second quarter of 2021 was securities trading. There they earned significantly less in comparison to the previous year's quarter, which was subject to intense fluctuations. BofA, for example, earned 38 percent less in bond trading and 33 percent less with stocks. After all, Citi was able to set a positive exclamation mark in stock trading with a 37 percent increase in earnings in the first quarter under the leadership of Jane Fraser. But the 43 percent drop in earnings in Citi's much larger bond trade weighed heavier.

Wells Fargo's quarterly figures were consistently more positive. The San Francisco-based bank is apparently slowly recovering from its scandal involving bogus accounts, for which it was fined around $ 3 billion in 2020. Wells Fargo earned $ 6.0 billion in the second quarter of 2021 after a loss of $ 3.8 billion in 2020. Like its competitors, the bank was able to release loan loss provisions, but also benefited from lower costs and the continued good business with IPOs. Their group earnings went against the industry trend by 11 percent.