The top banks have been the biggest beneficiaries the Fed’s rate hikes, which lets them charge more for loans while the amount they parcel out in interest on checking and savings accounts stays relatively stable. At JPMorgan, the biggest U.S. bank, deposits have been surging despite the paltry returns, rising at twice the industry average since 2014.
“The incremental deposits we acquired in this time alone would be enough to create the seventh largest U.S. bank,” Thasunda Duckett, who leads consumer banking at JPMorgan, said at the company’s investor day in February. “We’ve been successful because we’ve won at both acquiring new relationships and satisfying existing ones.”
At regional banks, rates have looked a lot like they do at the very top. On average, savings accounts at the 50 biggest banks pay just 0.05 percent.
The pressure building on some of them to start bumping those rates up comes at a tricky time, just when the Fed is signaling that it’s concerned the economy is slowing and it’s unlikely to keep raising the benchmark rate. That will make it hard for them to further bump up the rates they charge on loans while they lift payouts on savings accounts, squeezing their margins.
This article was provided by Bloomberg News.