Bank / Credit Union

Big banks post healthy profits following SVB collapse

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July 19, 2023

Big banks have begun releasing earnings this quarter, and so far have seen healthy profit margins despite the collapse of Silicon Valley Bank, Signature Bank and First Republic this year, according to a report by Business Insider.

JPMorgan Chase saw profits jump 67% to $14.5 billion for the second quarter, in large part driven by its purchase of First Republic, Bank of America, Citi, Morgan Stanley and Wells Fargo also beat expectations and lifted the KBW Bank Index by 4%.

Morgan Stanley saw its shares increase by 6.45%, its biggest increase since Nov. 9, 2020, while PNC Financial saw an increase of 2.51%, according to a report by Reuters.

This comes on the heels of news that big banks all passed the Federal Reserve's stress tests, which look at if banks have enough capital to absorb losses and continue lending in the wake of an economic recession.

In March, Silicon Valley Bank fell apart after losses in its bond portfolio triggered a run on deposits, which also caught Signature Bank and First Republic in the fallout. However, this gave big banks an opportunity to gain smaller lenders and win over other customers.

In addition, the Federal Reserve's current policy on interest rates have helped banks increase profits.