BoA gained 1 percent to its highest point since October 2008, and Cit saw a gain of 1.5 percent, which is the biggest jump since January 2018. Wells Fargo and Truist Financial Corp. also gained.
Many analysts have become optimistic about the state of banks and their shares. RBC Capital Markets analyst Gerard Cassidy predicted the gains will extend into 2020.
Stocks at banks have been outperforming the broader market as a whole, as the KBW Bank Index rallied 33 percent, and the S&P 500 rallied 29 percent.
Another thing that’s bolstering the banking industry is almost record levels of credit card debt, according to The Washington Post.
Companies have been increasing interest rates and fees, and while bank profits are reaching record levels, consumers could be in trouble if they don’t stay on top of their bills.
JPMorgan Chase and Citigroup both reported that credit card sales have increased by 10 percent and 5 percent, respectively, in the third quarter. Visa profits went up 17 percent, and Mastercard saw an increase of 11 percent.
“People like their credit cards,” said Jamie Dimon, CEO of JPMorgan Chase. “They use their credit cards far more than they use their debit cards. I don’t remember the last time I used my debit card.”
Also, delinquency rates are low despite the increasing debt load, with around 6 percent of consumers being late this year, compared with 15 percent in 2009. Consumers also seem to be tolerating the high interest rates as well.
“The credit card business is very profitable, and it sometimes props up parts of their business,” said Ted Rossman, an industry analyst for CreditCards.com. And “credit cards remain very popular, actually increasingly popular.”