The American Bankers Association, which represents the industry, touted a 7.8 percent increase in lending to businesses over the year, compared to 4.1 percent growth in 2017. | Getty Images Finance & Tax Trump's tax law makes big winners of banks, giving $29B boost to profits

The tax cut law signed by President Donald Trump helped boost bank profits to a record $237 billion last year, a 44 percent jump from 2017, the government said Thursday, the latest evidence of the law’s huge benefit to corporate America.

Lenders brought in $72.4 billion more in income in 2018 than the previous year, with $28.8 billion — or more than a third of that figure — attributable to lower taxes, the Federal Deposit Insurance Corp. said in its quarterly report on the industry.


Banks also earned more in interest last year, thanks to steady rate hikes from the Federal Reserve; net interest income was up 8.1 percent compared to 2017, as loan rates continue to rise faster than the rates those lenders pay out on deposits.

The American Bankers Association, which represents the industry, touted a 7.8 percent increase in lending to businesses over the year, compared to 4.1 percent growth in 2017. But overall lending — which grew a healthy 4.4 percent — rose at roughly the same pace as last year.

“With tax reform helping to spur business expansion, banks stepped up to meet increased loan demand from businesses of all sizes,” ABA chief economist James Chessen said in a statement. “Depositors benefited from increased competition for funds as banks looked to attract more deposits to supply loan demand.”

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Chessen also said banks are stocking up on funds to guard against foreseen and unforeseen losses, “as they look ahead to the twilight of this economic cycle.”

Some analysts were more critical.

“The Trump tax cut borrowed a lot of money and gave it to corporations," said Aaron Klein, a fellow at the Brookings Institution and a former official in President Barack Obama's Treasury. "Banks were some of the biggest winners.”

Others took issue with larger banks for not contributing more to the real economy; lending grew faster at community banks, at 6.5 percent, than the sector as a whole.

“The bigger banks only exist because they were bailed out, supposedly because they provide a social benefit, but here we are 10 years later, and we’re still waiting to see the benefit,” said Dennis Kelleher, president and CEO of Better Markets, which advocates for tougher financial regulation.

A large chunk of their profits “were from the Trump tax cuts, which they didn’t pass along to tens of millions of hardworking Americans, who are still getting next to nothing on their savings accounts,” he added.

The eight largest global U.S. banks — including JPMorgan Chase, Bank of America and Citigroup — were responsible for 43 percent of total lending to households and businesses and 40 percent of total business loans, according to the Financial Services Forum, which represents the CEOs of those banks. They account for roughly 45 percent of deposits.