US banks may become more circumspect in granting loans following recent turmoil in the sector, the country’s treasury secretary said in an interview to air on Sunday, while still predicting “moderate” GDP growth.

The financial sector was rocked last month by the dramatic collapse of Californian lender Silicon Valley Bank (SVB).

SVB’s fall was swiftly followed by the failure of another US regional lender and the merger under pressure of Swiss investment banking giant Credit Suisse with its regional rival UBS.

It is probable that banks will be “somewhat more cautious” in their operations, including in issuing loans to households and businesses, Janet Yellen will tell CNN in the interview, excerpts of which were released Saturday.

This could result in a tightening of credit availability, which in conjunction with rate hikes could weigh on economic activity, and could also contribute towards slowing down inflation.

That said, at a Tuesday press conference Yellen indicated that she had “not really seen evidence at this stage suggesting a contraction in credit.”

Despite the banking sector turmoil, Yellen told CNN, her forecast for the US economy remained the same: “I think the outlook remains one for moderate growth and a continued strong labor market with inflation coming down.” “I’m not seeing anything at this time that is dramatic enough or significant enough in my view to significantly change the outlook,” she said.

Separately, US banking heavyweights reaped windfalls from higher interest payments in the first quarter, brushing off a crisis prompted by the collapse of two regional lenders and setting aside billions of dollars in case loans turn sour as the economic outlook dims.

First-quarter 2023 earnings from JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co beat Wall Street expectations on Friday as consumer and corporate spending held up in the face of rate rises, although all three saw signs of a slowdown and made provisions accordingly.

“Goliath is Winning,” Wells Fargo analyst Mike Mayo said in a note citing a “uniquely strong quarter” for JPMorgan, calling it “a port in the storm” during recent banking sector tumult.

JPMorgan shares soared 7.6% in their biggest one-day percentage gain since November 2020.

Banks are building up rainy day funds as fears of an economic slowdown mount from the US Federal Reserve’s aggressive interest rate hikes to tame inflation as well as the recent turmoil fueled by the failures of two mid-sized banks.

JPMorgan CEO Jamie Dimon warned that while the US economy remains robust, last month’s banking crisis with the sudden collapse of Silicon Valley Bank (SVB) and Signature Bank could make lenders more conservative and hurt consumer spending.

“The storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks,” Dimon said.

Citigroup, which also beat Wall Street expectations as it earned more from borrowers paying higher interest on loans, said it was prepared for a mild recession in the US.

“It’s now more likely that the US will enter into a shallow recession later this year,” Citigroup CEO Jane Fraser told analysts on a conference call. “That could be exacerbated in depth and duration in a more severe credit crunch.”

Still, she said “the biggest unknown” was the impact of US interest rates and how talks in Washington on the US debt ceiling play out.

Shares of several banks surged after the results, and the S&P 500 bank index closed up 3.5%. Citigroup surged 4.8%. Wells Fargo investors were less impressed, pushing its shares down 0.05%.

Regional banks shares dragged on the index with its biggest losers, Zions Bancorp and First Republic Bank, both falling more than 3%. After falling sharply earlier in the day PNC Financial Services Group, which reported an 18.5% rise in first-quarter profit, managed to eke out a 0.36% gain.

The KBW regional bank index finished down 2.2%.

One area where it has proven harder for the big banks to profit in 2023 has been investment banking, which was reflected in JPMorgan’s business with a 24% fall in revenue at the unit as dealmaking dries up in the face of high interest rates, inflation and fears of a recession.

JPMorgan beat market expectations with a 52% rise in profit to $12.62 billion, or $4.10 per share, in the three months to the end of March, while its loan loss provisions increased by 56% from last year to $2.3 billion. Net interest income, a measure of how much a bank earns from lending, surged 49%.

The bank also reported a surge in deposits in the first quarter, as fears over the health of regional lenders drove customers to move their money to bigger banks.