Extra $1B at Big Banks Would've Been Nice to Have

Big US banks might have earned an extra $1 billion in net interest income over the past year if interest rates had increased by just 100 basis points, according to hypothetical calculations based on their mid-year regulatory reports. The scenario is now a reality after the Federal Reserve hinted at more rate hikes to come.

The fine print notes that these calculations are deeply hypothetical and other moving parts could offset the potential windfall from interest income. For example, a flattened yield curve could reduce the impact of higher rates on bank earnings.

Despite this, JPMorgan is optimistic about its third-quarter performance in trading revenue and investment banking, while Goldman Sachs cautioned that its fixed-income trading business is softer than expected.