• By The Financial District

U.S. Bank Profits Soar Due To Merger Frenzy, Fewer Bad Loans

Four of the largest US banks said their profits grew by double-digits last quarter, as a healthier economy has allowed banks to have fewer bad loans and charge-offs, the Associated Press (AP) reported.

Photo Insert: Citigroup was one of the four big banks that saw profits grow by double digits.

Results for Citigroup, Bank of America (BofA), Wells Fargo, and Morgan Stanley showed they benefitted from one-time boosts to their profits and low interest rates remain a significant headwind for Wall Street’s financial titans.

Bank of America said net income rose 58% to $7.26 billion, or 85 cents a share. That topped the estimates of Wall Street analysts who were looking for earning per share of 70 cents, according to FactSet.

Meanwhile, Wells Fargo posted a 59% jump in profit from a year earlier. Both banks benefitted from being able to reverse some funds set aside early in the pandemic in case of loan defaults.

These billions of dollars of potentially troubled loans have been moved back on to the banks’ “good” side of their books, which has resulted in one-time bumps to bank profits.

All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

Wells and BofA’s results echoed Wednesday’s results from JPMorgan Chase, which also saw its profits rise sharply last quarter due to the release of more loans from its troubled loan portfolio.

Wells, the country’s biggest mortgage lender, said its net interest income is “stabilized,” though it was 5% lower than in the same period last year.

Banking & finance: Business man in suit and tie working on his laptop and holding his mobile phone in the office located in the financial district.

The bank released $1.7 billion from its loan-loss reserves, money set aside to cover bad loans. Wells had set aside $8.4 billion to cover potentially bad loans in last year’s second quarter at the peak of the pandemic when millions of Americans lost their jobs and the economy effectively collapsed.

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