Without Tax-Cut Boom, Banks Would Be Facing a Bust
A second-quarter savior lifts bottom lines but little else.
A timely gain staves off pain.
Photographer: Bloomberg
Here’s the latest sign of who’s benefiting in President Donald Trump’s economy: Without the tax cut, bank earnings growth in the second quarter would have been pretty close to zilch. Instead, the nation’s six biggest banks are set to report a 14 percent improvement in earnings in the April-to-June period. Nine of every 10 dollars of that increase is thanks to the tax cut. Just one dollar came from an actual improvement in operations.
That small gain, just $413 million out of an estimated $3.5 billion increase, is odd given how strong the economy appears to be. Just last year, investors seemed certain that a mixture of Trump’s deregulation and then proposed tax cuts would boost corporate America and banks in particular. And yet those tax gains haven’t translated into much more business for the banks.