JPMorgan, Citi, And Wells Fargo All Beat Expectations

JPMorgan, Citi, And Wells Fargo All Beat Expectations
Daniel Johnston

5 months ago2 mins

What’s going on here?

Three US banking giants – JPMorgan, Citi, and Wells Fargo – surprised everyone with some unexpectedly sweet results on Friday.

What does this mean?

Whatever issues big banks are facing right now, it looks like they’ve found a silver lining: higher interest rates. See, JPMorgan, Citi, and Wells Fargo’s results were all cushioned by high rates, with net interest income – the difference between what they charge on loans and pay out on deposits – climbing 44%, 16%, and 29% respectively from the same time last year. And sure, investment banking and trading had a bit of a snooze for JP and Citi, but JP still managed to impress on the whole, and Wells saw a healthy uptick in its consumer and small business banking segment. So while Citi posted an overall dropoff in takings, the bottom line was that all three still beat revenue and profit expectations last quarter.

JPMorgan benefits from higher rates

Why should I care?

The bigger picture: Credit crunch.

The state of the US consumer is a big worry for the banking sector – and with further interest rate hikes looming, even more loans could end up going sour. Banks are already prepping for that, stashing away more cash for potential credit losses. And there’s plenty of room for bad loans to snowball: US debt is ballooning, so if and when consumers hit a wall and can’t pay that back, then banks – and the whole US economy – could take a serious hit.

US consumer debt

Zooming out: BlackRock’s gold star.

It was a full house for the financial sector on Friday, with BlackRock joining the expectation-beating club. The world’s largest investment manager closed the quarter with $9.4 trillion in assets under management – a surge that came as investors, buoyed by a more bullish market, funneled cash into its funds. The result: BlackRock breezed past profit expectations, with earnings growing by about a quarter compared to the same period last year.



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