Some of the largest U.S. banks said on Friday they got a profit boost from higher rates and painted a picture of a resilient economy, with sparks of hope in some businesses like deal-making that have been in the dumps of late. However, they also warned of risks ahead, with U.S. consumers pulling back on spending and losses building up in areas such as credit cards and office commercial real estate.
Some bank executives said U.S. consumers, who are the key drivers of the economy, still have healthy finances but warned spending was slowing and there had been a modest deterioration in some consumer debt. Weekly data from the Federal Reserve has shown consumer borrowing slowing. Bank credit card lending saw its growth rate peak in October 2022 after two years of strong increases and has moderated since. The main drag on consumer lending is auto loans. Annual growth peaked there in early 2022 and turned negative in April. In addition, Wells Fargo said consumer charge-offs, meaning debts that a bank has written off and does not expect to recover, continued to modestly deteriorate. Citi flagged that delinquency rates in credit cards and other retail lines are rising and expected to reach "normal levels" by the end of the year.
Source: Reuters