The big American banks are showing their muscles and boasting of being in good health despite the financial turmoil recorded in recent weeks.
In their first published results after the recent banking crisis of some regional banks such as Silicon Valley Bank, the first quarter 2023 earnings of financial heavyweights such as JPMorgan Chase, Citigroup and Wells Fargo have exceeded the expectations of Friday. Wall Street, as consumer and business spending held up despite interest rate hikes.
Wells Fargo analyst Mike Mayo said in a note that "Goliath is winning", highlighting growth, scale and resilience in an "exceptionally strong quarter" for JPMorgan - the country's largest bank -, which branded a “port in the storm” during the recent banking sector turmoil from Silicon Valley Bank and Signature Bank.
In fact, the entity chaired by Jamie Dimon (which rose almost 7% in the middle of the session) has surprised the market after obtaining a net profit of 12,622 million dollars (11,418 million euros) in the first quarter of the year, 52% more year-on-year, with “record” income of 38,000 million.
“Consumers are still spending and have strong balance sheets and businesses are in good shape,” Dimon proclaimed. “We will end up in recession, but perhaps a little later than expected”, the executive has qualified.
For its part, Citigroup has announced that it earned 4,606 million dollars in the first quarter, 7% more year-on-year, while Wells Fargo has revealed that in the first three months of the year it obtained a profit of 4,991 million dollars, 32% more than the previous year.
JPMorgan Chase, along with Bank of America, Citigroup and Wells Fargo, last March made an uninsured deposit of $5 billion each at First Republic Bank, in a joint effort of $30 billion (in which other financial entities) to avoid their bankruptcy.
Supported by the good results of the American banks, the European stock markets have also closed in green. The Ibex has thus ended its fourth consecutive week on the rise, standing above 9,300 points, with all the bank securities that gained more than 2% yesterday.
Analysts now estimate that the Federal Reserve could raise interest rates by just 25% at its next meeting in May before going into pause mode.
