What's going on?

JPMorgan and Citigroup, two of America�s biggest banks, both reported their latest financial results on Thursday� to a moderate impact on markets. Investors appear more focused on the future though � and interest rates have something to do with it.

What does this mean?

Both banks managed to make higher profits than expected. But this was largely because expectations had fallen in recent weeks after both banks said revenues at their trading divisions (e.g. stocks and bonds) would be much lower than last year. It turned out that their concerns were well-founded… but the good news is that both banks were able to increase their lending, which helped make up for the shortfall in trading.

Why should I care?

The bigger picture: More lending would be a good sign for the economy.

One of the concerns about the US economy overall is that banks have been lending less money than in previous years. This could suggest that businesses don�t see as much reason to borrow in order to invest in themselves and, more concretely, aren�t spending as much money doing so. However, JPMorgan�s loan growth was much stronger than anticipated in the past quarter (and Citi also grew its loans, but not by quite as much). If this trend continues as more banks report their earnings, it will be another reason for investors to be optimistic about US economic growth.

For markets: Interest rates have been the biggest driver of bank stocks lately.

The stock prices of most major banks have jumped almost 15% over the past month, despite warnings about revenue from their trading divisions. These jumps were largely driven by higher expectations for interest rates: the higher interest rates go, the more banks make on the loans they give (which are typically their biggest source of profits).