US banks such as Citigroup and JPMorgan Chase have earned billions of dollars from their “toxic” portfolios in the past three months as a rally in some of these distressed assets enabled them to book accounting gains or sell them.

Bankers say the gains revealed by Citi and JPMorgan in last week’s third quarter results bode well for other banks, after the sector suffered more than $1,000bn in write-downs globally on troubled assets such as mortgage-backed securities, as a result of the crisis.