New York (AFP)

Major US banks raked in big profits in the second quarter as the US economy continues to rebound from the pandemic shutdown, with customers spending lightly but still reluctant to borrow heavily.

At the height of the spread of Covid-19 last year, Wall Street establishments had set aside tens of billions of dollars to deal with possible unpaid debts from individuals and businesses.

But the dreaded bankruptcies did not materialize in the expected proportions.

And JPMorgan Chase, Citigroup, Bank of America and Wells Fargo, the four largest retail banks in the United States, were able to release a total of more than $ 9 billion in reserves in the second quarter.

"The vaccinations, combined with the continued support of fiscal and monetary measures, have promoted a full and rapid recovery and a return to economic health," said Bank of America CEO Brian Moynihan during a conference call Wednesday.

"Although we expect unpaid debt to increase at some point, we continue to see strong trends in all of our activities," noted Wells Fargo Managing Director Charlie Scharf.

Improved credit boosted bank profits to $ 11.9 billion at JPMorgan, $ 6.2 billion at Citigroup, $ 9 billion at Bank of America and $ 6 billion at Wells Fargo.

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The investment bank Goldman Sachs, also benefiting from the rebound in the economy, for its part earned 5.3 billion.

“The pandemic is sort of behind us,” commented JPMorgan CEO Jamie Dimon.

Encouraged by the rise in the value of their homes and stocks as well as by the increase in their income and savings, consumers "are eager" to spend, he said.

At the same time, companies are "in good shape" and "are not overly leveraged," Dimon added.

Whether customers will start borrowing more remains to be seen.

- Irregularity of the recovery -

While individuals generally spent more on restaurants, travel and clothing, they also repay more quickly.

Before the banks can charge them a fee.

At Bank of America, for example, the amounts disbursed by credit card by individuals increased by 46% but the amounts not refunded on these same cards fell by 15%.

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At the same time, interest rates remain at a low level, as decided by the US Central Bank to stimulate the recovery.

As a result, financial institutions earn less money on the loans they grant to their customers, which weighs on their income.

Bank of America's revenue fell 4%, Citigroup's 12%, and JPMorgan Chase's fell 8%.

The trend should improve, assured Mr. Moynihan, especially because "companies need to increase their stocks and hire to meet growing consumer demand."

"Like the rest of the banking industry, Bank of America is in the intermission between the first act (benefits on credit quality and markets) and the second act (improved lending activities), even though the intermission is a little longer than expected, ”summarized in a note analysts from Wells Fargo.

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On the investment banking side, the Wall Street giants generally saw the income generated by their brokers decline compared to the same period in 2020, then marked by very high volatility.

28% at JPMorgan Chase, 32% at Goldman Sachs, 12% at Bank of America.

But bankers responsible for advising companies on mergers and acquisitions or IPOs have been more in demand, especially at JPMorgan and Goldman Sachs.

If they are optimistic, the leaders of American banks are still on their guard against the Covid.

"We must remain aware of the irregularity of the economic recovery in the world," noted Jane Fraser, the boss of Citigroup, highlighting the difficulties of vaccine distribution.

© 2021 AFP