As interest rates continue to rise with inflation, banks are making a huge profit on their loans.
The Federal Reserve is implementing dramatic interest hikes as a way to try and offset the damages of inflation. Just last month they raised the interest rate three quarters of a point, according to the Times Union. That was the fourth increase this year and has created the highest borrowing rates since 2008.
Whether a recession will hit is still unknown, but in the meantime, banks are making a profit off the backs of borrowers and businesses taking out loans with hefty interest rates.
The hope is that higher interest rates will restrain economic growth as well as slowing down the labor market, bringing down the rate of inflation.
The Times Union reports that TrustCo Bank Corp NY made $19.4 million in net income for the 2022 third quarter. In 2021 that number was $16.8 million.
Pioneer Bank reports its earnings at over $2 billion in assets, which is the highest it’s been in the 130 years they’ve been in business.
As banks profit, consumers and businesses are suffering. Restaurants, which once had a profit margin of 3-5%, are now seeing profit margins of 1%. As for Christmas shopping, consumers are taking their time when it comes to finding affordable deals and getting their shopping done sooner.
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