In 2018, the largest US banks made more than $120 billion, an all-time high. Last year may have been even better.

We’ll find out soon. This week, the top six US banks — JPMorgan Chase, Wells Fargo, Bank of America, Citigroup, Morgan Stanley and Goldman Sachs — are scheduled to report earnings for the final three months of 2019.

Analysts are optimistic that a healthy US economy, a steadier picture for interest rates and solid loan growth powered banks to another year of records.

“We’re expecting the fourth quarter [last year] to do better than the fourth [quarter the year before], and that would put them in record earnings territory,” Stephen Biggar, director of financial institutions research at Argus Research, told CNN.

Jobless rate remains 3.5% – historic low – as US adds 145,000 jobs

For banks, the recent challenge has been to fend off the impact of lower interest rates, which eat into their lending profits.

But lower rates also encourage more customers to borrow money — perhaps by issuing corporate debt, or taking out a mortgage. Meanwhile, jobs growth has been steady and consumer spending remains strong, so the cost of issuing credit is lower than it would normally be at this point in the cycle, according to Biggar.

“If you have a job, [or] you lose one and can easily find another one, then you’re current on your bills and you don’t have those defaults,” he said.

Investor insight

Bank stocks rallied in the final quarter of 2019. The KBW Bank Index rose roughly 13%, while the S&P 500 gained 9%.

Driving those gains, in large part, is clear messaging on interest rates from the Federal Reserve. The central bank signaled in December that after three cuts in 2019, it intends to hold rates steady in 2020. That helps banks since it gets borrowers off the sidelines who may have been waiting for rates to fall even lower.

The bigger picture

US banks kick off a busy earnings season. FactSet forecasts that overall earnings for the S&P 500 will decline by 2%. Should that outlook pan out, it would be the first time the index has had four straight quarters of year-over-year earnings declines since mid-2016, per analyst John Butters.