US Banks Smile at Trump Tax Cut Effects

[Asia Economy New York=Correspondent Baek Jong-min] There is a claim that the background behind the recent consecutive strong performances of U.S. banks lies in President Donald Trump's corporate tax cut policy.

Bloomberg News reported on the 16th (local time) that the net profit of the six major U.S. banks last year totaled $120 billion. The news agency explained that before the tax rate cut, U.S. banks' net profits had never exceeded $100 billion.

The banks identified by Bloomberg are JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley. These banks all released better-than-expected results this week.

In the case of JP Morgan, the largest U.S. bank, the annual net profit last year reached about $36.4 billion (approximately 42 trillion won). The fourth-quarter net profit increased by 21% compared to the same period last year, reaching $8.5 billion. Besides JP Morgan, major banks posted excellent results, leading the recent stock market rise.

Bloomberg estimated that these banks saved about $12 billion last year due to the tax rate cut. This is the effect of the effective tax rate dropping from 20% to 18%. It means that the banks' earnings, which should have been paid to the government as taxes, are accumulating in their wallets.

The news agency pointed out that this phenomenon is leading to criticism of the tax cut effect. It is judged that the tax cut is worsening the fair distribution of wealth. In particular, comparing to the past when the financial industry bore higher tax rates than general companies, it highlighted that banks are the main beneficiaries of the tax cut. The increase in banks' profits is leading to an increase in shareholder dividends.

This criticism seems to have been influenced by an awkward scene at the signing ceremony of the U.S.-China Phase One trade agreement held the day before. The congressional specialized media The Hill reported that President Trump called out Mary Erdoes, CEO of JP Morgan Asset Management, at the signing ceremony, praised her performance, and asked, "How about thanking the president?" which sparked controversy.

This content was produced with the assistance of AI translation services.