Major US banks post solid third-quarter loan growth, but see more competition for deposits
XLF•JPMorgan, Citigroup and Wells Fargo reported higher net interest income and loan growth in the third quarter, while customers seeking better returns pressured banks to raise deposit rates. Citigroup and Wells Fargo also increased provisions for credit losses.
1. Loans and deposits grow
Average deposits rose 11% at Citigroup and 10.7% at Wells Fargo, while average loans increased 12% and 11%, respectively. JPMorgan reported a 4% rise in average deposits and a 2% increase in loans from a year earlier.
2. Deposit costs pressure margins
As Treasury yields hit record highs in the quarter, customers sought better returns elsewhere, prompting banks to raise deposit rates. JPMorgan's deposit margin fell to 2.78% from 2.79% a year earlier, while Wells Fargo's taxable-basis net interest margin declined to 2.43% from 2.61%.
3. Credit outlook draws attention
Citigroup and Wells Fargo increased their provisions for credit losses. JPMorgan CFO Jeremy Barnum said internal data did not show consumers shifting away from discretionary spending; analysts said they had seen no significant cracks in overall bank credit quality.
