U.S. banks beat expectations for economic rebound, red hot markets FILE PHOTOS: A combination of picture of signs of JP Morgan Chase Bank, Citibank and Wells Fargo Co. banks on the red note;
The four biggest U.S. consumer banks posted another strong quarter this week as the rebounding economy allowed them to release more cash they had set aside for pandemic losses, while sizzling deals, equity financing and trading activity also boosted their bottom lines.
JPMorgan Chase Co, Citigroup, Well Fargo Co and Bank of America Corp, seen as bellwethers of the broader economy by analysts and economists, reported a combined profit of $28.7 billion for the third quarter, beating analyst estimates.
Much of that was driven by the release of a combined $6 billion of funds that banks had put aside for pandemic loan losses which have not materialized thanks to extraordinary government stimulus, aid programs and loan repayment holidays.
With the national vaccination roll-out allowing people to get back to work and resume socializing after 19 months of pandemic-related business closures and travel restrictions, consumer spending has boomed, the banks said.
The loan growth, a key metric closely monitored by analysts, was mixed but more cautious on Wall Street. Some lenders are still struggling to control their loan books as consumers and businesses, flush with cash from government aid programs, continue to pay down loans.
Overall, however, executives were cautiously optimistic about the economy that the economy is on a healthy trajectory.
The recovery from the Pandemic continues to drive corporate and consumer confidence, Citigroup CEO Jane Fraser said in a statement. And while strong consumer balance sheets have impacted lending, we are seeing higher consumer spending across our credit products. JPMorgan said combined debit and credit card spending was up 26% year-on-year, while card payment rates stabilized contributing to modest card loan growth. At the Bank of America, combined credit and debit card spend was 21% up.
Spending on Citi-branded credit cards in the United States rose 24% from a year earlier, but with so many customers paying off balances net interest revenues from credit card accounts fell 3%. The last six months of soaring capital markets have also buoyed the country's largest lenders, with easy monetary conditions driving record-breaking volumes of mergers and acquisitions and initial public offerings, fueling fees.
The investment banking giant Morgan Stanley Inc dragged projections on Thursday, reporting a $3.58 billion profit, up nearly 38% on the first quarter of 2017 - leading out more financial results. That was due in large part to a record $1.27 billion in revenues from advising and advising on deals.
The investment bank and M&A is on fire, Gorman said in an interview with CNBC after the results. What are some proofs of global GDP growth, the record low interest rates and fiscal stimulus? The highlight of the third quarter of JPMorgan was also its Corporate Investment Bank Division, where advisory fees almost tripled due to strong M&A and equity underwriting. All told, this division reported a 6% rise in net income to $12.4 billion.
At Bank of America, revenue from its equity division rose 33% year-on-year, driven by growth in client financing activities and strong trading performance, while Citigroup said revenues for its equity market business had jumped 40%.
Goldman Sachs, the most prolific dealmaker in Wall Street, will conclude up bank earnings season on Friday.
On Wednesday, JPMorgan said that on average, the bank loans was up 5% across the board compared with last year, while Bank of America, Citibank and Wells Fargo reporting declines in loan growth year-on-year.