2023-07-14 19:37:45
The big three American banks, Wells Fargo, Citi Group y JPMorgan Chasehave kicked off the season of second quarter results in the United States and show that the worst of the March banking crisis is behind us. The three entities have presented their results to the market this Friday with disparate figures. In the case of Wells Fargo y JPMorgan Chase profits grow 57% and 67% between April and June compared to the same period of the previous year, up to 4,938 million dollars (4,397 million euros) and 14,472 million dollars (12,944 million euros), respectively . The rise in interest rates and the acquisition of the First Republic in the case of JP Morgan explain these numbers. However, Citi Group has experienced a decline of 36% in the second quarter. Revenues in the quarter experienced a decline of 1%, reaching 19,436 million dollars (17,318 million euros). By segments, that of institutional clients, the main component in the income structure, remained at 10,441 million dollars (9,303 million euros), 9% less.
Citigroup’s results had already been advanced by analysts, who expected a worse year-on-year performance of more than 30%. The main factor that explains the poor results has been the small profits that the negotiation of debt instruments has brought to the entity., according to a report by the XTB brokerage house sent to the media. The increase in interest rates has strengthened the banking business and the results of the sector thanks to higher income. Even so, analysts warn that banks’ margins are still limited, as bank competition for deposit remuneration is also growing, at least in the US market. “We must be attentive to the rate of net deposit outflows and the slowdown in the granting of loans, especially with respect to regional banks,” explains the XTB document.
JPMorgan Chase, the largest US bank by assets, The net income of the US bank between April and June totaled 41,307 million dollars (36,946 million euros), 34.5% above the turnover recorded by the entity in the second quarter of 2022. In this sense, JPMorgan expects to end the year with net interest income of around 87,000 million dollars (77,816 million euros), thus raising its previous forecast of around 81,000 million dollars (72,449 million euros) by 7.4%. ).
“We delivered another quarter of strong results,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase, noting that almost all business lines experienced continued growth in the quarter. “The US economy continues to be resilient. Consumer balance sheets remain healthy and consumers are spending, albeit a bit more slowly,” Dimon said, adding that despite the slight weakening in the labor market, job growth remains strong. “That said, there are still outstanding risks ahead,” he warned, referring to consumers slowly depleting their cash reserves, core inflation remaining stubbornly high, fiscal deficits large and the war in Ukraine continuing. .
Despite the negative results, Citgroup has made a positive assessment of its performance. “Despite a challenging macroeconomic environment, we have continued to benefit from our diversified business model and strong accounts“, has assessed the CEO of Citigroup, Jane Fraser, in statements collected by the Europa Press agency.
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For its part, the income of the Wells Fargo entity reached 20,533 million dollars (18,285 million euros) between April and June, 20.5% more than in the second quarter of last year, including growth of 29.1 % of net interest income, up to 13,163 million dollars (11,722 million euros). Even so, The entity registered an adverse impact of 1,713 million dollars (1,525 million euros) in relation to credit risk, in contrast to the 580 million dollars (516.5 million euros) scored a year earlier. “We delivered strong results in the second quarter. Our strong net interest income continues to benefit from higher rates, although we remain focused on cost containment,” Wells Fargo CEO Charlie Scharf said.
Overcome the March bank scare
The banking crisis in the middle of the first quarter of this year seems to be over after the bankruptcy of Silicon Valley Bank, Signature Bank and Silvergate Bank. However, banks may now face the risk of additional capital requirements required by the Federal Reserve. From now on, more banks would have to comply with stricter risk-based capital rules, which would require them to allocate resources to ensure regulatory compliance. “This could reduce the profitability of entities in the short term. Although these measures aim to strengthen the banking system, they may temporarily affect financial ratios and benefits,” XTB analysts say in their report. However, they also suggest that in the longer term, these measures will make it possible to build a more resilient system, reduce risk and support growth, as is the case in the European Union environment.
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