Tax cuts help US banks set new record for quarterly revenue

Tax cuts help US banks set new record for quarterly revenue
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U.S. banks shattered earnings records in the second quarter of 2018, reeling in $60.2 billion in revenue with the help of the corporate tax cuts passed last year, according to federal data released Thursday.

The second quarter net income of U.S. banks rose 25 percent from the same period in 2017 for a $12.1 billion increase, the data from the Federal Deposit Insurance Corporation (FDIC) says.

The FDIC attributed the record-breaking haul to lower tax bills for banks and higher net operating revenues as the economy grows at a quicker pace. Banks have set records for quarterly revenue in each of the past two three-month periods, a new peak for a years-long boom in financial sector profits.

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Banks have been among the biggest beneficiaries of the GOP tax cut, enjoying lower corporate rates while profiting from a sharp increase in consumer spending since the law’s enactment. Six big banks saved at least $3.59 billion in taxes in the first quarter of 2018 because of the tax law, which slashed the corporate tax rate from 35 percent to 21 percent.

The FDIC said tax savings were responsible for $6.5 billion of the $12.1 billion increase in bank profits since the second quarter of 2017. Banks also boasted larger loan balances and a decrease in delinquent debt owed.

Higher interest rate margins largely driven by Federal Reserve rate hikes helped banks score $134 billion in net interest income in the second quarter, a record-breaking $10.7 billion annual increase from 2017.

The financial sector has enjoyed a slew of beneficial moves from Washington since President TrumpDonald John TrumpREAD: Transcript of James Comey's interview with House Republicans Klobuchar on 2020: ‘I do think you want voices from the Midwest’ Israel boycott fight roils Democrats in year-end spending debate MORE took office. Republican lawmakers and Trump-appointed regulators have steadily reduced restrictions on banks through legislation and rule rewriting efforts, ten years after the financial crisis cratered the U.S. economy.