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What Bank Earnings Tell Us About the Economy

Wall Road is booming, or a minimum of components of it are. Merger mania and inventory buying and selling lifted the large U.S. banks’ third-quarter outcomes. On Fundamental Road, banks are nonetheless looking for larger mortgage development, however many shoppers are spending extra after holding out final yr.

Right here’s what the most important U.S. banks are telling us concerning the state of the economic system.

Spending

Buyer spending has eclipsed pre-pandemic ranges, financial institution executives stated, a development they see persevering with into the vacations. Spending on

Citigroup


C 0.57%

bank cards jumped 20% from a year ago to a file. Late charges are up and extra individuals are beginning to carry balances. Executives stated they have been again to combating for card prospects.

“That could be a large quantity of spending that’s happening,” stated

Bank of America


BAC 4.28%

Chief Government

Brian Moynihan,

“and it’s accelerating.”

Lending

A still-fragile economic system and wide-open debt markets have lower into demand for financial institution loans in the course of the pandemic. At

Wells Fargo


WFC -2.28%

and Financial institution of America, complete excellent loans have been down from a yr in the past however up from the second quarter.

“All of us dream of sooner mortgage development,”

Mike Santomassimo,

Wells Fargo’s chief monetary officer, stated on a name with analysts.

One mortgage class, securities-based lending, is rising quickly. Each Bank of America and

Morgan Stanley


MS 2.62%

posted double-digit growth in loans to shoppers borrowing against their stock-and-bond portfolios.

Buying and selling

Frenetic markets boosted huge U.S. banks by means of a lot of the coronavirus pandemic. Now, fairness buying and selling remains to be up, however fixed-income buying and selling is slowing. Morgan Stanley and Financial institution of America each notched positive factors in general buying and selling income.

JPMorgan


JPM 1.43%

Chase & Co., Citigroup and Wells Fargo reported decrease buying and selling income.

Traders have been making an attempt to determine the brand new “regular” degree of buying and selling. The third quarter could be proof that markets income will keep larger than beforehand anticipated on the huge U.S. banks, partially as a result of they’re successful extra enterprise from worldwide rivals, stated

Kush Goel,

a senior analyst at investor Neuberger Berman.

Offers

A global deal bonanza continued to mint cash for banks’ Wall Road operations. JPMorgan, Morgan Stanley, Financial institution of America and Citigroup all reported file quarters for mergers-and-acquisitions charges.

Goldman Sachs’s


GS 1.02%

league-leading crew is because of report Friday. Executives stated pipelines for potential future offers stay full. That could be a signal firm executives are assured sufficient within the economic system to aim transformative offers.

Wall Road Banks’ Quarterly Report

Write to David Benoit at david.benoit@wsj.com, Ben Eisen at ben.eisen@wsj.com and Orla McCaffrey at orla.mccaffrey@wsj.com

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