Major US banks show profit boost, but some caution from consumers
NEW YORK (Reuters) -Major U.S. banks said on Friday higher interest rates boosted profits, sending shares sharply up, even though they said the economy was slowing and saw signs of some caution in consumer behavior.
The Federal Reserve's aggressive monetary policy has made it harder for consumers and businesses to take on loans and repay debt while the tightening is prompting banks to slow the flow of credit and beef up cash levels after the panic in March when Silicon Valley Bank collapsed.
Citigroup (NYSE:C) CEO Jane Fraser said she was seeing a continued deceleration in spending, indicating «an increasingly cautious consumer.»
The third-largest U.S. lender said delinquency levels were still low compared to historical levels but it set aside more money to cover souring loans.
Wells Fargo said it was seeing charge-offs, or loans written off, increasing in its credit card portfolio. Average commercial and customer loans were down from the second quarter as higher rates and a slowing economy weakened loan growth, Wells Fargo CEO Charlie Scharf said on an analyst call.
«While the economy has continued to be resilient, we are seeing the impact of the slowing economy with loan balances declining and charge-offs continuing to deteriorate modestly,» said Scharf in the bank's press release.
Wells Fargo said on a conference call that customer decisions on how fast they want to invest in their businesses was coming through in loan growth, although credit quality is still good.
Regional lender PNC Financial (NYSE:PNC) Services, meanwhile, reported higher consumer loan delinquencies.
However, the outlook was not as negative as previously thought for some banks. JPMorgan Chase (NYSE:JPM) said that its economists had revised
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