WASHINGTON, Jan 12 (Reuters): Major US bank fourth quarter profits fell on Friday as lenders put aside cash to replenish a government insurance fund dented by last year's bank failures, and as the rising cost of retaining deposits ate into margins.
JPMorgan, Wells Fargo, Bank of America, and Citigroup, the country's largest lenders, showed signs that a boost from high US Federal Reserve interest rates that had allowed them to make more on lending may be fading.
The Fed had hiked rates in a bid to tame runaway inflation.
The banks combined set aside more than $8 billion to refill the Federal Deposit Insurance Corporation's deposit insurance fund (DIF), which took a $16 billion hit after Silicon Valley Bank and two other lenders failed last year.
Profits at JPMorgan Chase fell in the fourth quarter, but it posted a record annual profit of $49.6 billion and net interest income (NII), the difference between what banks earn from loans and pay to depositors, was up 19 per cent.
Bank of America's profit shrank on the DIF charge, a one-off hit on how it indexed some trades, and a 5 per cent decline in its NII as the bank spent more to keep customer deposits and demand for loans stayed subdued amid high interest rates.
Of the four, Wells Fargo was the only lender to post a jump in profits, thanks to cost cuts.
Citi, the most global US bank, swung to a surprise $1.8 billion loss for the quarter on the FDIC charges and as it stockpiled cash to cover currency risks in Argentina and Russia.
Big US bank profits fall on insurance fund charges
FE Team | Published: January 12, 2024 23:34:28
Big US bank profits fall on insurance fund charges
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