U.S. banks beat profit estimates on economic rebound, red-hot markets

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WASHINGTON (Businesshala) – The four largest US consumer banks posted another strong quarter this week as the rebounding economy allowed them to issue more cash they had set aside for pandemic losses, while burning deals, equities Financing and trading activities also boosted their bottom lines.

FILE PHOTO: Signs of JPMorgan Chase Bank, Citibank and Wells Fargo & Co Bank are visible in this combination photo from Businesshala Files. Businesshala/file photo

JPMorgan Chase & Company, Citigroup, Well Fargo & Company and Bank of America Corp, seen by analysts and economists as bellwethers of the broader economy, reported a combined profit of $28.7 billion for the third quarter, well above analysts’ estimates. is beating.

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Much of this was driven by the release of a combined $6 billion fund that banks had set aside for the pandemic loan deficit, which has not budged thanks to extraordinary government stimulus, aid programs and loan repayment holidays.

Banks said the national vaccination roll-out has allowed Americans to go back to work and resume socializing after 19 months of pandemic-related business closures and travel restrictions, sparking a boom in consumer spending.

Loan growth, a key metric closely watched by analysts, was mixed on Wall Street though. Some lenders are still struggling to grow their loan books as consumers and businesses, flush with cash from government aid programs, continue to pay off loans.

Overall, however, officials were cautiously optimistic that the economy is on a healthy trajectory.

“The recovery from the pandemic continues to build corporate and consumer confidence,” Citigroup CEO Jane Fraser said in a statement. “And while strong consumer balance sheets have impacted lending, we are seeing higher consumer spending across our card products.”

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JPMorgan said combined debit and credit card spending grew 26% year-over-year, while card payment rates contributing to modest card loan growth remained steady. At Bank of America, combined credit and debit card spending increased 21%.

Spending on Citi-branded credit cards in the United States rose 24% from a year ago, but net interest revenue from credit card accounts with so many customers declined 3%. In a sign that the trend is changing, net interest revenue on cards was up 5% from the second quarter.

Flamboyant capital markets have enthused even the country’s biggest lenders over the past six months, easing monetary conditions have driven record-breaking volumes of both mergers and acquisitions (M&A) and initial public offerings, fueling tariffs.

Investment banking giant Morgan Stanley Inc crushed estimates on Thursday, reporting a profit of $3.58 billion, up about 38% from the year-ago quarter. This was thanks in large part to a record $1.27 billion in revenue from advising on deals.

“The investment bank, itself, and M&A are on fire,” Gorman said in an interview with CNBC following the results. “We’ve got global GDP growth, huge fiscal stimulus, record low interest rates. People want to transact.”

The highlight of JPMorgan’s third quarter was also its corporate and investment bank division, where strong M&A and equity underwriting nearly tripled advisory fees. All told, that division reported a 6% increase in net revenue to $12.4 billion.

At Bank of America, revenue from its equity division increased 33% year-over-year, driven by increased customer financing activities and strong business performance, while Citigroup said revenue for its equity markets business increased 40%. % had increased.

Wall Street’s most prolific dealmaker Goldman Sachs will end the bank earnings session on Friday.

While consumer spending and capital markets improved, credit growth remained mixed.

JPMorgan said Wednesday that the bank grew an average of 5% over the past year, while Bank of America, Citi and Wells Fargo reported declining year-over-year loan growth.

Writing by Michelle Price; Reporting by Anirban Sen, Noor Zainab Hussain, Matt Scaffum, David Henry and Elizabeth Dilts; Editing by Nick Ziminsky

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