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Abu Dhabi, UAEWednesday 20 February 2019

Six biggest US banks made more than $100 billion in profit in 2018

JPMorgan and Bank of America had record years, while Goldman Sachs had its biggest haul since the financial crisis

Goldman Sachs Group, JPMorgan Chase and their peers have already reported more than $111 billion of profit for 2018. AP
Goldman Sachs Group, JPMorgan Chase and their peers have already reported more than $111 billion of profit for 2018. AP

The six biggest US banks have never had a $100 billion year. Until now.

Goldman Sachs Group, JPMorgan Chase and their peers have already reported more than $111 billion of profit for 2018. Morgan Stanley will only make that number bigger when it releases its fourth-quarter results Thursday.

They have Republican tax cuts to thank, along with rising interest rates, a surge in dealmaking and a retail-banking boom.

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JPMorgan and Bank of America both had record years, while Goldman Sachs and Citigroup had their biggest hauls since the financial crisis. The impressive numbers and upbeat commentary from bank leaders may quell fears that rate hikes and trade wars risk bringing an end to good times for the biggest lenders.

“Is it the end of a cycle? We don’t think so,” JPMorgan Chief Financial Officer Marianne Lake said Tuesday on a call with analysts. “We think the outlook for growth in the economy is still strong. The consumer is still strong and healthy, and we’re expecting to see, maybe slower, but still global growth going forward.”

The KBW Bank Index has gained 11 percent this month, spurred higher by fourth-quarter results. The 24-member index plunged 20 percent in 2018, the worst performance in seven years.

The record haul may provide fodder for critics of the 2017 US tax overhaul who have argued that it resulted in a bigger boon for major companies than for the nation’s middle class. Jamie Dimon, JPMorgan’s chief executive officer, on Wednesday made the case that the tax cuts fixed an uncompetitive system that had held back small businesses.

Within the banks, the benefits of the tax cuts are flowing more heavily to shareholders than their rank and file. Profit at the five firms jumped 28 percent from the previous high, while employee compensation expenses climbed just 1.8 percent from last year.

Washington may be less helpful to the biggest banks going forward. Wall Street critic Alexandria Ocasio-Cortez is headed to the Congressional committee that oversees the industry. “As I’ve said before, it’s People vs Money. We’ve got people, they’ve got money,” the New York Democrat wrote on Twitter a few hours after Goldman and BofA reported their results. “There is work to do.”

Updated: January 17, 2019 02:51 AM

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