According to the latest data of American banking regulators, the profit of American banking industry decreased by 70% in the second quarter of 2020, which is the second consecutive quarter of decline.
According to the data of the Federal Deposit Insurance Corporation on the 25th, the total profit of 5,066 banks in the United States in the second quarter of this year was $654.38+088 billion, a decrease of $43.7 billion or 70% compared with the same period last year. Earlier, the agency reported that the profits of American banks in the first quarter of this year dropped by 69.6% compared with the same period last year. At present, large American banks, including JPMorgan Chase, Citigroup and Bank of America, have reported a sharp drop in profits. Wells Fargo lost money for the first time since 2008.
The reasons for the sharp decline in bank profit margins mainly include these:
1, banks mainly make money by deposit and loan spreads. However, during the epidemic, the people of the whole country were isolated from their homes, and the social demand dropped sharply. Therefore, many industries actively or passively close their doors, the demand for deposits and loans temporarily stagnates, and the cash flow is slow, which will reduce the efficiency of banks to make money.
2. During the epidemic, most service industries were unable to open their doors for business, and some enterprises' capital chains were tense or broken, which directly affected the bad debt rate of banks. The longer the epidemic, the higher the bad debt rate. In order to prevent the bad debt rate from being too high, banks will cut interest rates.
Part of the bank's income comes from public consumption in entertainment places, such as restaurants, cinemas, hotels, theaters, etc. These places are now affected by the epidemic and cannot be restored to the previous level, which will inevitably affect the profits of banks.