The six largest banks made about $76 billion in combined profits in 2013, an annual haul second only to the $82 billion in total profits the banks recorded just before the financial crisis in 2006.
Morgan Stanley recorded $3.1 billion in profit for the year. Goldman Sachs netted $8 billion, Bank of America $11.4 billion, Citigroup $14.1 billion, and JP Morgan $17.9 billion, according to the Wall Street Journal.
CREDIT: Wall Street Journal
Wells Fargo led all U.S. banks with an annual profit of $20.9 billion. The six banks together hold assets with a net worth equal to 58 percent of the U.S. economy, a record level of industry concentration.
The strong profits signal that for bankers, at least, the pain of the financial crisis has passed. “The industry is back,” financial analyst Gerard Cassidy told the Journal, adding that he expects 2014 bank earnings to break all existing records. The resurgence isn’t limited to the six largest banks, either. The industry as a whole is expected to break profit records for 2013 once all 6,900 banks’ paperwork is tabulated, and banking companies have returned to dominate major listings of the country’s most powerful companies.
While bank profits are rebounding rapidly, the rest of the economy hasn’t been able to shrug off the Great Recession so quickly. Unemployment remains high, job openings are few, and those lucky enough to have work are earning less than they did a few years ago. Millions work full time but earn too little to keep their families out of poverty. Those hardships are part of the legacy of the financial crisis that highly-profitable banking companies helped to bring about — a crisis that cost the world at least $6 trillion and possibly as much as $20 trillion, by one estimate.
Some banks have been forced to pay legal settlements to resolve investigations into their roles in triggering that $20 trillion economic bomb. But set next to that overall crisis figure for the crisis, punitive legal deals for banks like JP Morgan and Bank of America look microscopic. Flaws in the deals mean taxpayers will subsidize some of the price tag, cushioning bank profits from the blow. Deals like JP Morgan’s and Bank of America’s are largely tax deductible and often give the banks credit for taking actions that are already in the company’s best financial interest.