The results of the big bank will continue on Tuesday with the figures of Goldman Sachs and Morgan Stanley, more dependent on the investment market than on the average consumer.
JPMorgan Chase, the main bank in the United States, and other important banking entities reported this Friday a reduction in earnings in the year 2022, when they returned to accumulating reserves against defaults upon sighting the recession.
Despite generally higher cumulative earnings, helped by Federal Reserve rate hikes, full-year earnings were down for JPMorgan (-22%), Bank of America (-14%), Wells Fargo (- 39%) and Citigroup (-32%).
Leaving aside the peculiarities of each business, the chief executive of the first bank, Jamie Dimon, very followed on Wall Street, indicated that the economy is “solid” but prospects have deteriorated and expects the country to face a “mild recession” soon.
For this reason, the entity he directs reserved some 1,400 million for credit losses alone in the fourth quarter, a movement that reverses the trend of 2021, when the sector released the money set aside to deal with defaults at the time of closures due to the pandemic. , in 2020.
Dimon listed the risks in a note, from the war in Ukraine to energy, without forgetting inflation and the actions of central banksand he reiterated that view in the subsequent conference noting that last year was “weaker” than 2019, and that 2023 could be worse.
Echoes of recession caution were also heard from Bank of America, with its chief executive Brian Moynihan noting “an increasingly slowing economic environment”, and Wells Fargo, whose boss Charlie Scharf is “watching the impact of high interest rates”. of interest”.
These entities also wrote down reserves to prepare for possible defaults, which reduced profits.
Prudence, but great benefits
Even so, the figures were bulky: JPMorgan earned 37,676 million dollars after increasing sales by 6% year-on-year, up to 128,695 million dollars, followed by Bank of America, which earned 27,528 million after increasing income almost 7%, up to 95,000 million.
Citigroup, which made no reference to the situation and assured that it had met its objectives of simplifying the structure and strengthening its business areas, earned 14,845 million with 5% higher income, of 75,338 million.
And Wells Fargo, still weighed down by regulatory and legal issues after the scandal of fraudulent accounts and which recently announced that it would lose weight to its mortgage business, earned 12,197 million with a 6% lower billing, up to 73,785 million.
The results of the largest asset manager in the world, BlackRock, were also in a similar vein, which reported a drop in profits and annual revenue and saw the size of its portfolio reduce by 14%up to 8.6 trillion dollars.
“The overall summary of the banks is that fears of recession are guaranteed and the results are going to be disappointing this quarter”Oanda analyst Ed Moya said in a note.
Investors gave a mixed reception to the figures, which are usually interpreted as a “thermometer” of the economy, and around mid-session they rose JPMorgan (1.2%), Citigroup (0.6%) and Bank of America ( 0.4%) while Wells Fargo fell (-0.82%).
The results of the big banks will continue on Tuesday – Monday is a holiday in the US – with the figures from Goldman Sachs and Morgan Stanley, more dependent on the investment market than on the average consumer, and which probably reflect the poor performance of Wall Street this year. past.