NEW YORK–The nation’s biggest banks are reporting strong first quarter financials, topping the expectations of many analysts.
The nation’s largest bank, JPMorganChase, posted record first-quarter revenue as net interest income surged almost 50% from a year ago on higher rates. It’s adjusted earnings were $4.32 per share vs. $3.41 per share as estimated by Refinitiv, with revenue of $39.34 billion vs. an estimated $36.19 billion.
According to JPMorgan Chase, profit jumped 52% to $12.62 billion, or $4.10 per share, in the first three months of the year. That figure includes $868 million in losses on securities; excluding those losses lifts earnings by 22 cents per share, resulting in adjusted profit of $4.32 per share, CNBC reported.
Companywide revenue rose 25% to $39.34 billion, driven by a 49% rise in net interest income to $20.8 billion, thanks to the Federal Reserve's most aggressive rate-hiking campaign in decades, the report added.
‘Generally Healthy’
"The U.S. economy continues to be on generally healthy footings —consumers are still spending and have strong balance sheets, and businesses are in good shape," CEO Jamie Dimon said in the release. "However, the storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks.”
Dimon added the industry could rein in lending as banks become more conservative ahead of a possible downturn.
Deposit Outflow
Fallout from the failure of Silicon Valley Bank and Signature Bank combined with other factors to drive an outflow of deposits from many banks, with customers moving funds to accounts where they can find better yields, such as money market funds. However, most of the funds that have moved have been commercial accounts.
JPMorgan is among those banks, which said it saw a 7% decrease in total deposits from a year ago to $2.38 trillion (approximately equal to the total asset size of U.S. credit unions). In JPMorgan’s case, it said retail deposits climbed 3% in the fourth quarter, with deposits in its retail banking division declined 4% in the first quarter.
Profits Up at Wells Fargo
Meanwhile, San Francisco-based Wells Fargo reported it earned $4.99 billion, up 32% from $3.79 billion a year earlier. Revenue rose 17% to $20.73 billion. That beat the $20.09 billion expected by analysts, the Wall Street Journal said.
The bank added $643 million to its reserves to cover potential loan losses. Wells Fargo said it reflected an increase in reserves for commercial real estate loans, particularly office loans. It also increased reserves for credit card and auto loans, the report added.
“The bank’s lines of revenue told a tale of two stories,” the Journal reported. “Net interest income jumped 45% from a year ago. It was helped by the Fed’s aggressive rate-hiking campaign, which allowed banks to charge more on loans. Noninterest income, on the other hand, fell 13%. Wells Fargo said earlier this year it would dramatically scale back its mortgage business, which was once the largest in the U.S.”
Total Deposits Fall
Total deposits at Wells Fargo fell to $1.36 trillion, an 8% decline from a year earlier and a 2% decline from the fourth quarter. The bank, which has been working to control costs, said noninterest expenses fell 1% from a year earlier, according to the report.
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