Big banks benefit from higher interest rates. Their customers are not.

High interest rates raise the fortunes of the country’s largest banks. They don’t do the same for bank customers.

Earnings for JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC) rose in the third quarter largely because higher interest rates allowed them to take in more interest income.

Their size allows them to take advantage of those rates by charging more for loans while maintaining the amount they pay for deposits compared to smaller competitors.

These advantages show up in a key measure of profitability known as net interest income, which measures the difference between what banks earn on their loans and what they pay for their deposits.

This number has increased by significant amounts in all three banks compared to the same period last year. Together, the lenders secured a record $50 billion, an 18% increase from the same period last year. JPMorgan and Wells Fargo even raised their guidance on how much net interest income they will earn for the full year.

However, there were also clear signs that some borrowers were starting to struggle. JPMorgan, Citigroup, and Wells Fargo all increased the amount of loans they wrote off as losses. The total amounts discounted in those three banks amounted to $3.98 billion, an increase of 31% over the previous quarter and 105% over the same period last year.

The total amount was the highest collectively for the three lenders since the early days of the pandemic, in the second quarter of 2020.

At Citigroup, CEO Jane Fraser warned that American consumers were cutting back on consumption. “The continued slowdown in spending indicates increasing consumer caution,” she said in a statement.

Affluent customers account for almost all of the spending growth and vulnerability seen among those with lower credit scores, she added. Citi expects credit card losses to reach pre-coronavirus levels by the end of the year.

Even as the economy remains resilient, “we are seeing the impact of the slowing economy as loan balances decline and debt collections continue to deteriorate modestly,” Wells Fargo CEO Charlie Scharf said.

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Wells Fargo had $850 million in discounted charges, $622 million of which came from consumer loans. The bank expects net interest income to decline by 3% from the third quarter to the fourth quarter.

“Where Wells Fargo sees weakness,” according to CFO Mike Santomassimo, is in commercial real estate, and “I think we will see some losses in that portfolio over time.”

As for Jamie Dimon, CEO of JPMorgan, he spoke in a more sombre tone. He said consumers and businesses “remain generally healthy” but consumers are spending their excess cash reserves at a time when inflation risks remain high, raising the possibility of higher interest rates.

He added that the wars in Ukraine and Israel could also affect energy and food markets, global trade and geopolitical relations.

“This may be the most dangerous time the world has seen in decades,” he said.

He acknowledged that the bank was “earning profits in excess of both net interest income and below normal credit costs, both of which will normalize over time.” He told reporters that there is a “big discussion” within the bank about when this normalization will occur.

“I personally think it will happen a little sooner than Jeremy,” he said, referring to his CFO.

He’s “trying to throw some caution out the window,” Dimon, S&P Global Market Intelligence’s director of financial institutions research, Nathan Stovall, told Yahoo Finance on Friday.

He added that the bank knows that credit costs will rise. “They are trying to prepare the street so that we can see tougher times ahead.”

One regional bank, PNC (PNC), demonstrated the problems small lenders have faced during this period of rising interest rates. Its profits and revenues decreased compared to last year, as did net interest income. It expects net interest income to decline again in the fourth quarter compared to the third quarter.

The Bank of Pittsburgh said it would reduce its headcount by about 4%, saving $325 million. Several other regional banks, including Truist (TFC), have also cut jobs in recent months as they adjust to more uncertain economic conditions.

PNC stock fell 3% on Friday while Citigroup shares sold off slightly in the latter part of the day. Shares of JPMorgan and Wells Fargo rose.

“I think the tipping point depends entirely on what happens with the Fed next year,” PNC CEO William Demchak said in response to a question about whether PNC Bank’s net interest income has bottomed out.

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