Americans are more confident in U.S. banks than they’ve been in five years as an improving economy helps lenders boost profit and repair their balance sheets, a new Gallup poll found.
People who said they have “a great deal” or “quite a lot” of confidence in U.S. lenders climbed to 26% of respondents from a record low of 21% a year ago, according to a statement on Gallup’s website today. That’s still below the 41% recorded in 2007 before the credit crisis and 32% in 2008 as the financial system began to falter.
The telephone poll of 1,529 people on June 1 through June 4 followed all-time highs for the Standard & Poor’s 500 stock index in May and record first-quarter profit for the banking industry. New York-based JPMorgan Chase & Co., the biggest U.S. bank by assets, and San Francisco-based Wells Fargo & Co., the biggest mortgage lender, had their best year for profit in 2012.
“Most authorities agree that U.S. banks did well on their ‘stress tests’ and that banks’ balance sheets are much improved, as are their earnings,” Gallup said in the statement. The Federal Reserve regularly tests the largest financial companies to see if they’d stay healthy in a crisis, and 17 of 18 passed this year.
The percentage of people expressing confidence in banks is now almost equal to those with little or no confidence, which Gallup said fell to 28% from 35% a year earlier.
Confidence hit its low in 2012, a year that included the discovery that bankers were manipulating benchmark interest rates for their own benefit, and a trading loss at JPMorgan that blemished its image as one of the best-run lenders.
That same year, five mortgage-servicing firms including Bank of America Corp. and JPMorgan reached a $25 billion settlement with 49 states and the federal government to end a probe of abusive foreclosure practices.
Confidence in banks ranked 10th among 16 types of institutions, according to Gallup. While lenders trailed the military, small business and the police, they were ahead of television news, newspapers and Congress, the poll found. Confidence in banks also rose the fastest of any group this year, according to Gallup.
The nationwide survey of U.S. adults has a 3% margin of error and confidence level of 95%, Gallup said.