Big US banks rake in record profits on stimulus payouts

US lending giants reported blockbuster profits last week, in part because stimulus payments have helped consumers bounce back from the Covid-19 crisis. The emergency funds helped boost deposits at the four biggest US banks to

$6.9 trillion last quarter, up 15 per cent from a year earlier.

The resilience of consumers also prompted the four lenders — Citigroup, JPMorgan Chase, Bank of America and Wells Fargo — to reduce the amount they had set aside for soured loans by $12.7 billion. “This is the healthiest we have seen the consumer emerge from a crisis in recent history, driven in large part by the US government stimulus package,” Citigroup’s new chief executive officer, Jane Fraser, told analysts.

At JPMorgan Chase & Co deposits jumped 24 per cent in the first quarter, and the bank posted a $5.2 billion reserve release. At Bank of America Corp, deposits were up 19 per cent, and the lender released $2.7 billion from its stockpile for souring loans

The banks’ CEOs were largely optimistic about the outlook as Americans get vaccinated and the US emerges from the Covid-19 crisis. Consumers have spent just half the money from the latest round of stimulus, according to Wells Fargo & Co CEO Charlie Scharf. At Bank of America, the figure is only about 30 per ecnt, CEO Brian Moynihan said. That means they will still have money to deploy as businesses come back online and leisure and business travel resumes. “That bodes well for our economic reopening,” Moynihan said. “The good news is the consumers are healthy.”