Four of the largest US banks unveiled comfortable first-quarter results on Friday, helped by rising interest rates, appearing to have been barely affected by the turmoil that rocked the financial world just a month ago. .
They remain on their guard, JPMorgan Chase putting for example an additional 1.1 billion dollars aside to deal with possible outstanding payments from its customers due to the deterioration “of the economic outlook”.
And some warn that banks could lend a little less to individuals and businesses.
But the US economy “continues to do well as a whole,” said Jamie Dimon, CEO of JPMorgan.
“Consumers continue to spend and have strong balance sheets, and businesses are healthy,” he said. “We’re going to end up having a recession, but maybe a little later than expected. »
Banks having unveiled their results on Friday, JPMorgan but also Citigroup, Wells Fargo and PNC, have mainly benefited from the sharp rise in interest rates initiated for a year by the American central bank to fight against inflation.
This drives up their net interest income, which is the difference between the interest they earn on loans to their customers and the interest they pay to savers and other creditors.
Not like in 2008
They also welcomed new customers preferring to place their money with institutions considered too big to fail rather than in smaller banks, after the failures of Silicon Valley Bank (SVB) and Signature Bank.
Despite withdrawals made by customers wishing to invest their money in more profitable financial products than a simple current account, deposits increased slightly over the quarter compared to the end of 2022 at JPMorgan and PNC. They fell by only 3% at Citi and 2% at Wells Fargo.
“We had a tough time in March,” JPMorgan chief financial officer Jeremy Barnum said on a conference call. But “the system as a whole is in very good health,” he said.
His counterpart at Citigroup, Mark Mason, expressed a similar sentiment.
“We are in a very different situation and health” from that of the 2008 financial crisis, he assured.
The big banks managed “in a very short time” to raise 30 billion dollars to come to the aid of First Republic in mid-March, “which clearly demonstrates our solidity in terms of capital and balance sheets”, he said. raised.
The boss of JPMorgan as the chief financial officer of Citi does not, however, rule out the possibility that a handful of regional banks will still go bankrupt.
Sharp increase in profits
Revenue at JPMorgan, the largest U.S. bank by asset size, soared 25% to a record first quarter.
That of Citigroup, the 3rd American bank, increased by 12% “despite the tumultuous environment for banks”, underlined its boss, Jane Fraser.
JPMorgan saw its net profit jump 52% to $12.6 billion. That of Wells Fargo increased by 34% to 4.7 billion dollars, that of Citigroup by 7% to 4.6 billion and that of PNC by 18% to 1.6 billion.
These results were rather well received on Wall Street where, at mid-session, JPMorgan took 7%, Citigroup 2.8% and Wells Fargo 0.1%. PNC, on the other hand, fell by 2%.
Banks are on the lookout.
After the turmoil in the banking sector in March, “financial conditions are likely to tighten as lenders become more cautious, and we don’t know if that will slow consumer spending,” Dimon said.
To deal with the risk of non-payment, particularly on the side of loans in the commercial real estate sector or on credit cards, Wells Fargo has set aside an additional $643 million and Citigroup $241 million.