The biggest US banks have warned their investors that they will eventually have to bow to customer pressure and offer much higher rates to depositors, cutting into the higher profits generated off the back of the Federal Reserve’s interest rate rises.
Big consumer banks such as JPMorgan Chase and Wells Fargo have been able to charge more for loans as the Fed has lifted benchmark interest rates to a 22-year high, without having to pass on commensurately higher savings rates to depositors, particularly retail customers.
In third-quarter earnings on Friday, both banks, along with Citigroup, reported year-on-year gains from their lending businesses which were ahead of analysts’ forecasts. JPMorgan, the largest US bank, and Wells raised their outlooks for lending income in 2023.
