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Illustration: Sarah Grillo/Axios

Some of America's biggest banks are making more money now than they were before the pandemic hit.

Why it matters: Quarterly earnings out this week hint that the worst economic scenarios haven't yet come to pass. Still, executives are warning there could be a rocky road ahead for the economy.

  • These banks are the biggest lenders in the country and have insight into the financial health of millions of Americans and businesses. So analysts often parse these quarterly results for indicators of how the economy is doing.

What they're saying: "The consumer is in reasonably good shape for whatever we may face next," Jennifer Piepszak, JPMorgan's chief financial officer, said during a call with Wall Street analysts this week.

  • "Having said that, there is a significant amount of uncertainty about what we may face next."

By the numbers: JPMorgan reported $9.4 billion in profits — 4% more than it made this time last year.

  • Goldman Sachs, which has way less exposure on the lending front, made $3.6 billion, nearly double what it made in the same quarter a year ago.
  • And while Wells Fargo and Citigroup saw a drop-off, they're both still profitable. Citi made $3.2 billion, while Wells Fargo raked in $1.7 billion.

What's going on: Banks were buoyed by strength in the Wall Street-facing divisions: including the parts of the company that, for instance, are focused on trading or help take companies public.

  • Also helping results: There haven't been widespread loan defaults, despite millions of Americans being out of work and scores of businesses operating at reduced capacity.
  • JPMorgan, for example, reported $1.2 billion in net charge-offs — or loans it doesn't expect payment on — which is less than it reported this time last year.

The state of play: Last quarter, the biggest banks set aside a whopping $24 billion to cover potential bad loans. This quarter banks added to those reserves, though at a slower pace — a sign that executives are still preparing for defaults down the line.

  • Bank of America released some of the money set it previously set aside for consumer loan losses, noting an improving economy.
  • The bank's CEO, Brian Moynihan, said on Wednesday Bank of America is seeing a return to "a generally sound underlying economy ... [b]ut we won’t get there until we have fully addressed the health care crisis and its associated effects."

Between the lines: The banks would have raked in even more money, were they not dealing with the aftermath of a slew of scandals.

  • Wells Fargo took a nearly $1 billion hit in expenses related to the fallout of its fake account scandal.
  • Citi had higher expenses thanks to a fine from a regulator in response to management failures.
  • JPMorgan also took a charge to help cover a $920 million fine for rigging commodity markets between 2008 and 2016.

The bottom line: Executives largely attribute the strength to stimulus measures — and they're calling for another package to help shore up consumers.

  • Another stimulus package "will create more buffer to take us through hopefully the other side of the tunnel, without too much pain and destruction to bank balance sheets," with loan defaults, Mark Doctoroff, global co-head of financial institution coverage at MUFG, tells Axios.

Go deeper

Big bank bond trading soared in 2020

Data: Analysis of company filings; Chart: Axios Visuals

The pandemic helped to pull big banks’ bond trading revenue out of a multi-year slump.

Why it matters: Revenue within the so-called fixed income, currency and commodity (FICC) divisions has been slowing for years.

Read: Former Vice President Walter Mondale's last message

Photo courtesy of Mondale.

Former Vice President Walter Mondale wrote a farewell letter to his staff, sent upon his death on Monday, thanking them for years working together.

Dear Team,

Well my time has come. I am eager to rejoin Joan and Eleanor. Before I Go I wanted to let you know how much you mean to me. Never has a public servant had a better group of people working at their side!

Together we have accomplished so much and I know you will keep up the good fight.

Joe in the White House certainly helps.

I always knew it would be okay if I arrived some place and was greeted by one of you!

My best to all of you!

Fritz

Former Vice President Walter Mondale dies at 93

Walter Mondale, left, with former President Jimmy Carter in Jan. 2018 at the McNamara Alumni Center on the University of Minnesota's campus in Minneapolis. Photo: Anthony Souffle/Star Tribune via Getty Images

Walter Mondale, who transformed the role of U.S. vice president while serving under Jimmy Carter and was the Democratic nominee for president in 1984, died Monday at 93, according to a family spokesperson.

The big picture: President Biden, who was mentored by Mondale through the years, said in 2015 that the former vice president gave him a "roadmap" to successfully take on the job.