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US banks generated record profits last year of almost $300bn as the industry paid lower levels of interest to savers while benefiting from an uptick in lending activity and benign credit losses.
The 2025 profits at more than 4,300 US banks totalled $295.6bn, according to FDIC data aggregated by BankRegData. This was up 10 per cent from a year earlier and set a new record, beating the industry’s previous high-water mark of $279bn in 2021.
The figures highlight a period of prosperity for US banking under the Trump administration that has helped boost the pay of the industry’s top executives.
“It was a happy year,” said veteran banking analyst Christopher Whalen, chair of Whalen Global Advisors. “It’s another year where we have skipped past any credit concerns which to me is remarkable.”
Banks were boosted by paying about 2.04 per cent in funding costs for deposits and other liabilities in 2025, down from 2.36 per cent in 2024. Their net interest margin, which is the spread on what their assets yield and what they pay for liabilities, rose to 2.99 per cent from 2.92 per cent.
Banks added about $750bn to their $13.5tn loan portfolio while the share of loans marked as delinquent fell slightly to 1.56 per cent from 1.6 per cent a year earlier.
While the total dollar amount of profits is a record for the industry, it was only the eighth highest year since 2003 in terms of rate of return on banks’ assets.
The Federal Reserve lifted interest rates from rock-bottom levels in 2022, triggering worries that borrowers could struggle.
Concerns were particularly acute for US consumers, who borrowed heavily during the pandemic, and in commercial real estate which has struggled amid uneven return-to-office numbers.
Both groups have held up better than feared. However, some caution that signs of troubled borrowers can be obscured by a rule change last year that banks need only report loans that have been modified to prevent borrowers from falling behind on repayments in the past 12 months, rather than cumulatively.
“Banks are a reflection of the economy,” said Jason Goldberg, an analyst at Barclays, pointing to last year’s GDP growth and historically low unemployment levels.
“If the consumer has a job, he or she continues to spend and pay their bills,” he said. “There is definitely increased stress on the lower end of consumers, given multiple years of elevated inflation but banks continue to manage that.”
The KBW bank index, which includes the largest US banks such as JPMorgan, Bank of America and Citi, rose almost 30 per cent in 2025, outperforming the broader market, supported by the benign loan losses and the Trump administration’s deregulatory agenda.
But bank stocks have fallen in the past two weeks amid a broader market sell-off as investors fret about the impact of artificial intelligence on existing business models.
“The gains on the stock side are going to be much harder to get,” Whalen said. “Just because investors I think are cautious this year.”