U.S. Banks Profit From Higher Rates, More Loans And Lower Costs

NEW YORK (Reuters) - Three of the largest U.S. lenders reported double-digit profit increases on Friday, helped by an expanding economy and lower taxes, and forecast more growth ahead as long as current trends continue.

Banks benefited from strong loan demand in the latest quarter, with lending rates rising faster than funding costs, stock market activity boomed and the Trump administration provided a business-friendly environment in Washington.

As a result, banks’ net interest margins - the difference between what they pay for deposits and what they charge for loans - widened. Other key businesses, like managing customers’ wealth or providing treasury services for corporations, generated consistent fees that padded the bottom line.

Banks also got a lift from cost-cutting programs they implemented after the 2007-2009 financial crisis, as well as tax cuts signed into law by President Donald Trump last year. Combined, those factors are saving the industry billions of dollars each quarter.

“Wages are going up. Participation is going up. Credit that’s been written is pristine. Housing is in short supply. Confidence - both small business, consumers - is extraordinarily high, and that could drive a lot of growth for a while despite some of the headwinds out there,” JPMorgan Chase & Co Chief Executive Officer Jamie Dimon told analysts on a conference call.

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