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What Bank Earnings Tell You About The Economy

Wall Street is booming, or at least part of it is booming. Merger enthusiasts and equity trading boosted third-quarter performance of major US banks. On Main Street, banks are still looking for greater loan growth, but many customers are spending more after last year’s hold.

This is what the largest US bank is telling us about the economic situation.

Spending

Customer spending is above pre-pandemic levels, and this trend continues during vacations, according to bank executives.Spending on Citigroup C 0.65%

Credit cards have set a new record with a 20% surge from a year ago. Overdue fees are rising and more people are starting to have balances. Executives said they were back in the fight for card customers.

“It’s a huge amount of spending going on,” said Bank of America BAC. 4.03%

“And it’s accelerating,” said Brian Moynihan, CEO.

lending

The still fragile economy and widespread bond markets reduced demand for bank loans during the pandemic.At Wells Fargo WFC -2.14%

At Bank of America, total loan balances declined from a year ago, but increased from the second quarter.

“We all dream of accelerating loan growth,” Wells Fargo Chief Financial Officer Mike Santomasimo said in a phone call with analysts.

One loan category, securities-based lending, is growing rapidly.Both Bank of America and Morgan Stanley MS 2.57%

Lending to clients borrowing from our equity and fixed income portfolio grew by double digits.

transaction

The enthusiastic market has boosted major US banks through many of the coronavirus pandemics. Currently, equity trading is still on the rise, but fixed income trading is slowing. Both Morgan Stanley and Bank of America recorded an increase in overall transaction returns. JPMorgan JPM 1.42%

Chase & Co., Citigroup and Wells Fargo reported a decline in transaction returns.

Investors are trying to understand the new “normal” level of trading. Investor Neuberger Berman’s senior analyst, Kush Goel, said in the third quarter, market earnings were previously due to the fact that major US banks were gaining more business from their international rivals. It may indicate that it remains higher than expected.

Deals

Global trading jackpots continued to cast money to run the bank’s Wall Street. JP Morgan, Morgan Stanley, Bank of America, and Citigroup all reported record quarters for M & A fees.Goldman Sachs‘NS

GS 0.90%

The league leading team will report on Friday. Executives said the pipeline for potential future transactions is still full. This is a sign that corporate executives can attempt transformative transactions with sufficient confidence in the economy.

Wall Street Bank Quarterly Report

Write to David Benoit (david.benoit@wsj.com), Ben Eisen (ben.eisen@wsj.com), Orla McCaffrey (orla.mccaffrey@wsj.com)

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What Bank Earnings Tell You About The Economy

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