NEW YORK–The nation’s largest banks have been signaling their concerns over a pending recession, and although their heir third-quarter profits were strong, the numbers were muted by increases in their allowances for loan losses.
Profits fell 17% at JPMorgan and 25% at Citigroup, but topped analysts’ expectations. Wells Fargo reported a 31% drop in earnings, missing expectations, though it said a $2 billion charge for legal and regulatory issues hurt what was otherwise a solid quarter, according to the Wall Street Journal.
Bank executives told the Journal that central banks’ efforts to tighten credit conditions leave the economy’s path forward uncertain.
“But today, businesses and households still look like they are in good shape, and consumers still appear to be spending and borrowing at a healthy clip,” the Journal said.
As CUToday.info reported earlier, JPMorgan CEO Jamie Dimon has warned that an economic “hurricane” lies ahead, and he is sticking with that view.
“We’re just getting closer to what you and I might consider bad events and my hurricane,” he said in a call with analysts, the Journal reported.
“For now, higher rates are actually helping the banks in some ways, allowing them to charge more on loans to businesses and consumers,” the Journal report continued. “JPMorgan, Wells Fargo and Citigroup each reported double-digit growth in interest income.”
Customers Draw Down Savings
Total loans rose at both JPMorgan and Wells Fargo. Smaller banks U.S. Bancorp and PNC Financial Services Group Inc. also sported broad-based loan growth in the quarter, the report noted, adding all of the banks saw increases in customer spending on credit cards.
And, like credit unions, the banks are also seeing their customers draw down savings.
“While credit quality remains strong, we’re actively monitoring inflation-sensitive industries,” Wells Fargo CEO Charlie Scharf said on a call with analysts, the Journal said. “We do expect to see increases in delinquencies and ultimately credit losses but the timing remains unclear.”
The Very Best in CU Reporting. Every Morning. To Your Inbox. At a Total Cost of ‘Free!’
Don’t forget to check your Spam/Junk email folder if you haven’t been receiving your free, popular and daily CUToday.info news headlines.
And if you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time.
CUToday.info has received very positive response from readers following the move to an improved provider of the daily headlines, but many also noted they did need to go to their Spam/Junk folder and mark it as safe.
The new email solution has not only improved every reader’s delivery experience, but it also features a fresh, new format that is easy to read, especially on mobile devices.
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.