U.S. banks beat profit estimate on red hot markets economy FILE PHOTOS: A combination photo of signals of JP Morgan Chase Bank, Citibank and Wells Fargo Co. bank.
WASHINGTON Reuters - The four largest U.S. consumer banks posted another strong quarter this week as the rebounding economy allowed them to release more cash for pandemic losses, while sizzling deals, equity financing and trading activity also increased their bottom lines.
JPMorgan Chase Co, Citigroup, Well Fargo Corp and Bank of America Corp, viewed 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 this was driven by the release a combined $6 billion of funds the banks had put aside for pandemic loan losses that haven't materialized thanks to extraordinary government stimulus, aid programs and loan repayment holidays.
With the national vaccination rollout allowing Americans 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.
Bank growth, which was closely watched by analysts, was mixed however across Wall Street. Some lenders are still struggling to grow 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 that the economy is in a healthy trajectory.
The recovery from the pandemic continues to drive corporate and consumer confidence, Citigroup said in a statement. But while strong consumer balance sheets have negatively impacted lending, we are seeing higher consumer spending across our card products. JPMorgan said the combined debit and credit card spend was up 26% year-on-year, while card payment rates stabilized contributing to modest card loan growth. Combined credit and debit card spend was up 21% at Bank of America.
Spending on Citi-branded credit cards in the United States jumped 24% from one year ago, but with so many customers paying off balances Net interest revenue from credit card accounts fell 3%. Sizzling capital markets have also buoyed the country's largest lenders with easy monetary conditions driving record-breaking volumes of both mergers and acquisitions M&A and initial public offering, fueling fees.
Investment banking giant Morgan Stanley Inc crushed the estimates on Thursday, reporting a profit of $3.58 billion, up nearly 38% on the year-ago period. This was largely based on a record $.27 billion from advising revenue through advising deals.
The investment bank, itself, and M&A, is on fire, Gorman said in an interview with CNBC after the results. Great growth in GDP, huge stimulus package, low interest rates. The highlight of JPMorgan's third quarter was also its Corporate Investment Bank division, where advisory fees almost tripled due to strong M&A and equity underwriting. All told, that division reported a 6% rise in net revenue to $12.4 billion.
Bank of America said revenues from its equities division rose 33% year-on-year, driven by growth in client financing activities and strong trading performance, while Citigroup said revenues for its equity markets business had jumped 40%.
Goldman Sachs, Wall Street's most prolific dealmaker, will wrap up bank earnings season on Friday.
JPMorgan reported that, on Wednesday, loans were up 5% across the bank compared with last year, while Bank of America, Citibank and Wells Fargo reported decline in loan growth year-on-year