US banking giants capture most of industry profits since 2015

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The four largest U.S. banks are on track to capture their biggest share of industry profits in nearly a decade, a sign of how they are consolidating their dominant position in the market.

JPMorgan Chase, Bank of America, Citigroup and Wells Fargo, the four largest U.S. banks by deposits and assets, collectively reported about $88 billion in profits in the first nine months of 2024, according to Financial Times calculations based ​​in figures from industry tracker BankRegData.

Together they account for 44 percent of the U.S. banking industry’s profits (the highest share during the first nine months of the year since 2015), even though the group includes more than 4,000 of the country’s other banks.

Including US Bank, PNC and Truist, the seven largest banks by deposits generated nearly 56 percent of all bank profits in the first nine months of the year, up from 48 percent for the same period in 2023.

JPMorgan, BofA, Citi, Wells, US Bank and Truist declined to comment. PNC did not respond to requests for comment.

The data comes from earnings reported to the Federal Deposit Insurance Corporation, a banking regulator, and relates only to earnings reported by U.S. banks.

Banks can also include different businesses within the data they report, and larger banks like JPMorgan and BofA include earnings from investment banking and trading where many smaller banks don’t compete.

While the numbers don’t perfectly match the profits banks report to investors, they demonstrate the growing importance of size in the banking industry as it grapples with increased regularity, technology, marketing and operating costs. Larger companies can spread these costs over more customers.

“Once you’re way below the larger banks, then it becomes really difficult to make the necessary investments and have the same recognition,” said Chris Kotowski, a banking analyst at Oppenheimer.

“We are a very mobile society, especially since Covid. Do many people who move from New York to Florida, for example, really need to have a different bank in Florida than in New York?

The United States has an unusually fragmented banking system, largely because consolidation was delayed by restrictions on interstate banking that were only lifted in the 1980s.

The dominant positions of the largest US banks have fueled calls for greater consolidation among smaller banks to better compete.

Deals have slowed in recent years, however, there are hopes that the incoming Trump administration could adopt a more permissive policy.

Bob Diamond, a former head of Barclays who now runs an investment firm, told the Financial Times in early December that he believed the number of US banks could be more than halved in the next three years.

But the main competitors of the big banks are increasingly non-bank entities, including private credit companies, which offer services similar to those of banks.

Financial institutions like Apollo, Affirm, and Rocket Mortgage have become increasingly influential lenders to corporations, home buyers, and consumers, although these loans are typically funded by banks.

In the mortgage market, nonbank companies now service more than half of U.S. mortgage loans, up from 11 percent in 2011.

In his annual letter to shareholders, JPMorgan CEO Jamie Dimon called tech giant Apple “effectively” acting like a bank by holding, moving and lending money.