US banking results: Wells Fargo and JP Morgan double profits and Citigroup lose 36%

Citigroup’s results had already been suggested by analysts who expected more than 30% worse year-on-year performance. The main factor explaining the poor results was the small profits brought to the business by negotiating debt instruments., according to a report by XTB brokerage firm to the media. The increase in interest rates strengthened the banking business and industry results thanks to higher income. Despite this, analysts warn that banks’ margins are still limited, as competition from banks for deposit payments is also increasing, at least in the US market. “We must be mindful of net deposit outflow rates and slowdowns in lending, especially for regional banks,” the XTB document explains.

JPMorgan Chase, the largest bank in the United States by assets, The US bank’s net income between April and June was $41.307 million (€36,946 million), 34.5% higher than the agency’s turnover in the second quarter of 2022.. In this sense, JPMorgan expects to close the year with net interest income of approximately $87,000 million (€77,816 million), thus raising its previous forecast of around $81,000 million (€72,449 million) by 7.4%.

“We’ve had another quarter of strong results,” said Jamie Dimon, JPMorgan Chase Chairman and CEO. Growth continued in all business lines in the quarter. “The US economy remains resilient. Consumer balance sheets are healthy and consumers are spending, albeit a little more slowly,” Dimon said. employment growth remains strong. “However, there are still glaring risks ahead,” he warned, citing consumers’ gradual depletion of cash reserves, core inflation stubbornly high, large fiscal deficits and the ongoing war in Ukraine.

Despite the negative results, Citgroup gave a positive assessment of its performance. “Despite the challenging macroeconomic environment, We continued to benefit from our diversified business model and strong accounts.“, evaluated Citigroup CEO Jane Fraser in statements gathered by the Europa Press agency.

For its part, the Wells Fargo entity’s revenue totaled $20,533 million (€18,285 million) between April and June, 20.5% more than last year’s second quarter, which reached 13,163 with a 29.1% increase in net interest income. million dollars (11,722 million euros). Even if, The business recorded an adverse impact of $1,713 million (€1,525 million) related to credit risk., in contrast to the $580 million (516.5 million euros) recorded a year ago. “We had strong results in the second quarter. Despite our focus on controlling costs, our strong net interest income continues to benefit from high rates,” said Wells Fargo CEO Charlie Scharf.

Overcome the March bank scare

The banking crisis in the middle of the first quarter of this year seems to have ended with the bankruptcy of Silicon Valley Bank, Signature Bank and Silvergate Bank. However, banks may now face the risk of additional capital requirements mandated by the Federal Reserve. From now on, more banks will need to comply with stricter risk-based capital rules, which will require them to allocate resources to ensure regulatory compliance. “This may reduce the profitability of organizations in the short term. Although these measures are aimed at strengthening the banking system, they may temporarily affect financial rates and benefits,” XTB analysts report. However, they also suggest that in the long run, these measures will make it possible to build a more resilient system, reduce risk and support growth, as in the European Union environment.