America’s biggest banks reported their strongest first-quarter profits in years, driven by a surge in trading — but JPMorgan Chase CEO Jamie Dimon warned the US economy faces a growing list of global risks.
JPMorgan Chase, the country’s largest bank, said its trading desk racked up a record $11.6 billion as clients scrambled to buy and sell investments amid worries about wars, trade tensions and artificial intelligence shaking up industries.
That trading business — essentially the fees banks pocket for helping customers trade stocks and bonds — jumped 20% from a year earlier. Investment banking fees, earned from advising on company mergers and helping firms raise money, surged 28% as dealmaking picked up.
The US financial giant said the American economy had stayed resilient, with steady consumer spending and business activity helping keep loan defaults low. Overall, the bank’s profit rose 13% to $5.94 a share, beating analysts’ forecasts. Total revenue climbed to $50.5 billion.
Still, Dimon, who has led JPMorgan for two decades, told “Fox & Friends” on Tuesday that investors will remain on edge until the Iran war is resolved.
“Look, the markets are unpredictable and it’s hard to for me to tell you exactly what,” he said when asked about the economic impact of the conflict.
“But I think they’re just looking at, is there a chance something can go wrong now?” the exec added.
On a call with analysts, the long-serving chief executive also noted there had been about looser lending standards in some corners of finance.
“There’s been some weakening in underwriting, and that’s not just by private credit,” the top banker warned, referring to loans made by non-bank lenders that operate with less government oversight.
The strong results capped a banner start to earnings season for the biggest banks. Goldman Sachs posted record trading numbers the day before.
Citigroup on Tuesday posted its highest quarterly revenue in a decade at $24.63 billion and saw profit jump 42%. Its trading revenue rose 19% to $7.2 billion, with the fixed-income desk, which focuses on bonds and interest-rate products, was up 13%.
“We’ve entered into the final phase of our divestitures and 90% of our transformation programs are now at or near our target state,” CEO Jane Fraser said.
The most important point is that Citi showed strong top-line growth … even with restructuring,” wrote Wells Fargo analyst Mike Mayo, who is bullish on the bank’s performance.
Wells Fargo’s profit also rose, helped by higher trading gains from the same market swings. But its net interest income — the core profit banks make on the difference between deposit rates and loan rates — came in at a lower-than-expected $12.1 billion.
The bank stuck with its full-year forecast of about $50 billion in that category. Shares slipped more than 5%.
Wells Fargo CEO Charlie Scharf said American households and businesses were holding up well despite economic turmoil worldwide. But he warned on confidence indicators and underlying balance-sheet trends that pointed to “rising stress for less affluent consumers,” citing risks from higher energy prices.
Bank of America analyst Ebrahim Poonawala said the US-Israeli strikes on Iran were the biggest risk facing American homeowners and firms alike.
“The risk of a recession could rise if this war becomes something that creates an extended period of supply chain disruptions while oil goes even higher,” he wrote in a note to clients.
