How banks make money

A bank borrows from its depositors and lends to borrowers. Deposits that paid interest got 2.37% on average at JPMorgan in 2025, but about 24%sec.gov ·2025 of all its deposits, mostly checking accounts, paid nothing at all. Counting every account, deposits cost it about 1.80%sec.gov ·2025.

A bank doesn't lend out every deposit. JPMorgan held $2.6T of deposits at the end of 2025 and had lent out about 58%sec.gov ·2025 of that much. The rest sat in bonds and other investments ($777.3B) and cash ($343.3Bsec.gov ·2025, mostly at the Federal Reserve), which earn less but can be turned into cash fast if depositors ask for their money.

Lending earns interest; doing a job for someone earns a fee. JPMorgan is a neighborhood bank and a Wall Street bank in one company. Wall Street work, like helping companies sell their shares and trading, brought in $45.4Bsec.gov ·2025. Managing people's investments brought in $20.3B, and everyday banking fees, from cards, accounts and mortgages, $15.2Bsec.gov ·2025.

A bank without a Wall Street arm usually lives mostly on the interest gap and everyday fees.

Some loans are never paid back, so a bank sets money aside for the losses it expects. JPMorgan's provision for credit losses was $14.2Bsec.gov ·2025 in 2025. The loans it actually wrote off, minus what it got back later, came to $9.8B, about 0.74%sec.gov ·2025 of its loans.

Cards lose the most, because there's nothing behind them to take back: 3.31% of card loans were written off in 2025, against 0.47%sec.gov ·2025 of car loans, which have the car behind them. Card interest rates have to cover losses like that and still leave a profit.

Banks book the losses they expect over a loan's whole life up front: JPMorgan's set-asides in 2025 included $2.2Bsec.gov ·2025 for Apple Card loans it had agreed to take on but hadn't made yet.