Rising interest rates bode well for big U.S. banks JPMorgan Chase records record quarterly profit Net profit soars 67%

Rising interest rates bode well for big U.S. banks JPMorgan Chase records record quarterly profit Net profit soars 67%

Rising interest rates caught many U.S. banks off guard but was a boon for the big lenders, driving (149.77, 0.90, 0.60%)to a record quarterly profit, while some other big banks signaled stronger-than-expected lending income .

JPMorgan Chase & Co and Wells Fargo & Co( 43.56 , -0.15 , -0.34% ) both raised their loan revenue forecasts when they reported second-quarter earnings on Friday, 　　as customers borrowed more money and endured higher interest rates . Citigroup’s earnings report showed unexpectedly strong growth in credit card revenue. The earnings report comes as the latest data show consumer confidence is improving as inflation slows.

Bank of America’s( 29.11 , -0.56 , -1.89% ) start to earnings season underscores the divergence in the sector’s performance this year, with big banks taking on new clients and lending money, and JPMorgan Chase also acquiring the collapsed First Trust Bank, and revenue growth again. Add help. Bank executives talk of the lending business at its best, where revenues are growing faster than bad loans are being generated.

“The U.S. economy continues to be resilient,” JPMorgan Chase & Co. Chief Executive Dimon said. “Nearly all of our business lines continued to grow during the quarter.”

JPMorgan’s net profit jumped 67 percent to $14.5 billion, helped by a $2.7 billion gain on its First Trust acquisition. Return on common equity rose to 20%.

The bank expects net interest income to surge about 30% this year, compared with a previous forecast of 26%. Wells Fargo said it expected an increase of 14%, up from a previous estimate of 10%.

In contrast, companies that rely more on deals and matchmaking are struggling. Analysts, for example, expect Goldman Sachs( 326.19 , -2.49 , -0.76% ) to report the lowest profitability in nearly five years since Chief Executive David Solomon took the helm.

Nationally, small and medium banks experienced turmoil in the first half of the year as rising interest rates eroded the value of assets on their balance sheets. That has prompted corporate and wealthy clients to shift deposits to banks perceived to be stronger.

One issue in Wells Fargo’s earnings report also deserves attention. The company disclosed a provision for loan losses of $1.7 billion, higher than analysts had expected. This includes provisions related to office loans.

The bank’s chief financial officer, Michael Santomassimo, said it was difficult to see the full impact of commercial real estate losses in the current cycle.