Although JPMorgan Chase, Bank of America and Wells Fargo posted higher-than-expected net profits in the final quarter of last year, they disappointed the market in terms of turnover, with Bank of America (BofA) and Citigroup even revising their revenues compared to the same. quarter of 2023.
In mid-September, the bank’s CEO, Jane Fraser, stated that this transformation would be accompanied by a major reorganization of the company’s hierarchical structure, the most important for the bank “for 20 years.”
In a conference call, CFO Mark Mason indicated that the provisions or reserves included in the balance sheet for the last quarter of 2023, for about $780 million, concern about 7,000 layoffs in 2024.
The accounts of the large banks were affected by the banking crisis, which began last year and has not yet ended as claimed by the large left-wing media and Joe Biden’s government. Everyone had to contribute in the fourth quarter to the reconstruction of the deposit guarantee fund.
The deposit insurance agency, or FDIC, recorded some $16.3 billion in losses after the bankruptcy of several US banks due to massive withdrawals.
Silicon Valley Bank (SVB) came under FDIC control and Silvergate Bank closed.
Additionally, Signature Bank and First Republic were sold in a rush move to New York Community Bank and JPMorgan Chase respectively.
To try to stabilize the system, the FDIC agreed to guarantee all deposits of SVB and Signature Bank customers, when the limit is usually $250,000 per person per establishment.
The four banks that published results on Friday contributed $8.6 billion in total to the deposit insurance fund, which affected their balance sheets.
But, in general, these entities benefited from the banking crisis, which led many savers to leave small regional banks to take refuge in large firms seen as more solid.
In a general sense, the big banks consolidated their power with the banking crisis under the Joe Biden government.
The benefit of high interest rates
In the quarter, they also benefited from high interest rates, which the US Federal Reserve (Fed, central bank) maintains at their highest levels since 2001 to try to contain inflation.
JPMorgan Chase saw its net interest income (interest earned minus interest paid) rise 19%.
Banks expect those spreads to be narrowed by interest rate cuts by the Fed this year.
Furthermore, at a time when the US economy shows signs of further cooling, banks increased their provisions or reserves for risky loans, although in a measured manner.
JPMorgan Chase Chief Financial Officer Jeremy Barnum nonetheless noted that “the consumer is fine.”
What is not known is what being well represents for Barnun, when more than 63% of Americans barely make ends meet with their income.
“Expenses are sustained,” he added, but he did not specify that the expense is higher due to high prices, the need for two jobs and the skyrocketing use of credit cards with interests higher than 30% in the third year of individual financial asphyxiation. and familiar.
“We are closely watching the evolution of credits and even if we see a deterioration, it is in line with our expectations,” summarized Wells Fargo CEO Charlie Scharf.
The statistics
JPMorgan Chase reported a drop in net profit in the fourth quarter of last year, to $9.3 billion, down 15% year-on-year. Per share, the record most followed by the market, was 3.97 dollars, above the 3.36 expected by analysts.
Bank of America, the second largest bank in the United States by assets, published results for the fourth quarter of 2023 that were worse than the same period of the previous year.
The bank earned revenues of $22 billion in this period, down 10% year-on-year, lower than Wall Street estimates.
Its net profit was $3.1 billion, -56% year-on-year. Per share it was $0.35, compared to $0.85 in the same period last year.
Citigroup saw its turnover fall 3% in the last quarter of 2023. It also made provisions and had expenses that affected its results by $4.6 billion, for a loss of $1.8 billion in a “very disappointing” quarter, according to its CEO. , Jane Fraser.
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Source: With information from AFP and AP
