Despite the pandemic, the country’s three largest banks on Friday reported a big jump in profit for 2021.
According to the Associated Press, Citi and Wells Fargo saw growth despite the pandemic, and JPMorgan also saw growth despite a 14 percent decline in the fourth quarter.
JPMorgan posted a profit of nearly $50 billion, which is more than the hit by the COVID-19 pandemic just before its reported $36.4 billion it made in 2019. Citi recorded a modest increase from $21.2 billion in 2006 to $21.95 billion in 2021. Wells Fargo saw a modest increase of $21.55 billion from the previous record. Their operations have been halted by the Federal Reserve following problems and scandals due to sales practices.
JPMorgan and Citi reported higher expenses during their last quarter, which were due to hiring new employees and paying them higher salaries that were now being sought. The AP said Wells Fargo was able to keep spending during the quarter relatively managed, but inflation is expected to take a hit.
“Labor markets are tight,” JPMorgan CFO Jeremy Bynum said in a call with reporters, according to the AP. “There’s a bit of labor inflation, and it’s important for us to attract and retain the best talent and get paid competitively.”
Banks say the major profit growth has been due to the economy and consumers as well as businesses being willing to spend and borrow. However, inflation for 2022 is still on the minds of bank executives, journalists and industry analysts.
“We spent a good deal of 2021 talking about inflation and I suspect we’re going to spend even more time in 2022,” Citigroup Chief Financial Officer Mark Mason said during Friday’s call with reporters. “
According to KGO-TV, the consumer price inflation report released last week shows that prices have risen to a 39-year high in a span of 12 months. Pandemic-era inflation may last longer than initially expected. The Federal Reserve is speeding up to normalize its pandemic-era monetary policy. Starting in January, monthly purchases of Treasury securities were cut by $20 billion.
Federal Reserve Chairman Jerome Powell spoke at Wednesday’s press conference and said the policy update would contain a “dot plot” or summary of economic projections, KGO-TV reported. He said there is a risk that pandemic-era inflation will last longer than initially expected.
“One of the reasons behind our move today is to put us in a position to tackle inflation,” Powell said.
According to the AP, the banks still receiving quarterly results for 2021 include Bank of America, Goldman Sachs and Morgan Stanley. Goldman and Morgan are said to have some of the highest compensation costs in the industry. Goldman also plans to offer one-time bonuses to its highest-paid employees to keep them at the firm.