US banks beat earnings estimates on economic rebound and boiling markets

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WASHINGTON, Oct. 14 (Reuters) – America’s four largest consumer banks posted another strong quarter this week, as the rebound in the economy freed them up to free up more cash than they had set aside for them. losses from the pandemic, while the scorching deals, equity financing and business activity also boosted their bottom lines.

JPMorgan Chase & Co (JPM.N), Citigroup (CN), Well Fargo & Co (WFC.N) and Bank of America Corp (BAC.N), considered by analysts and economists to be the barometers of the economy at Broadly speaking, reported third-quarter profit of $ 28.7 billion, beating analysts’ estimates.

Much of this was due to the combined release of $ 6 billion in funds that banks had set aside for pandemic loan losses that did not materialize thanks to extraordinary government stimulus, aid programs. and loan repayment holidays.

With the nationwide rollout of immunization allowing Americans to get back to work and resume social activities after 19 months of business closures and pandemic-related travel restrictions, consumer spending has skyrocketed, banks said .

Loan growth, a key metric closely watched by analysts, however, has been mixed on Wall Street. Some lenders are still struggling to increase their loan portfolios as consumers and businesses, which have funds from government assistance programs, continue to repay their loans.

Overall, however, policymakers were cautiously optimistic that the economy is on a healthy course.

“The recovery from the pandemic continues to boost business and consumer confidence,” Citigroup CEO Jane Fraser said in a statement. “And while strong consumer balance sheets have had an impact on lending, we are seeing an increase in consumer spending on our card products. “

JPMorgan said combined debit and credit card spending grew 26% year-over-year as card payment rates stabilized, contributing to modest growth in card loans. At Bank of America, combined credit and debit card spending rose 21%.

Spending on Citi-branded credit cards in the United States jumped 24% from the previous year, but with so many customers paying off balances, net interest income from credit card accounts jumped. fell 3%. As a sign that the trend could be reversed, net card interest income increased 5% from the second quarter.

Sizzling capital markets over the past six months have also supported the nation’s largest lenders, with easy monetary conditions driving record volumes of mergers and acquisitions (M&A) and initial public offerings fueling the charges.

Investment banking giant Morgan Stanley Inc (MS.N) crushed estimates on Thursday, reporting profit of $ 3.58 billion, up nearly 38% from the quarter of the year. last year. This was largely thanks to a record $ 1.27 billion in revenue from transaction advice. Read more

“Investment banking itself and mergers and acquisitions are on fire,” Gorman said in an interview with CNBC after the results. “We have global GDP growth, huge fiscal stimulus, record interest rates. People want to trade.”

JPMorgan’s third quarter highlight was also its Corporate & Investment Bank division, where advisory fees nearly tripled due to strong M&A and equity underwriting. In total, this division recorded a 6% increase in net sales to $ 12.4 billion. Read more

At Bank of America, revenue from its equity division grew 33% year-over-year, driven by growth in customer financing activities and strong business performance, while Citigroup said revenue from its equity market activities jumped 40%. Read more

Goldman Sachs (GS.N), Wall Street’s most prolific dealmaker, will close the banking results season on Friday.

While consumer spending and capital markets have shone, loan growth has remained mixed.

JPMorgan said on Wednesday that on average, loans grew 5% across the bank from a year ago, while Bank of America, Citi and Wells Fargo reported lower loan growth. from one year to the next.

Written by Michelle Price; report by Anirban Sen, Noor Zainab Hussain, Matt Scuffham, David Henry and Elizabeth Dilts Editing by Nick Zieminski

Our standards: Thomson Reuters Trust Principles.


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