While the banking sector has had a very short period of time, some of the biggest US lenders reported first-quarter earnings on Friday that beat investors’ expectations. And while they warned that credit would become more scarce and expensive, they said the economy has so far remained resilient.
Banks’ incomes were boosted by higher interest rates, which allowed them to charge more for loans they paid on deposits. Strong reports Last month’s collapse of Silicon Valley Bank and Signature Bank appears to have bolstered the biggest banks by driving customers toward larger institutions seen as more stable.
JPMorgan Chase, the nation’s largest bank, reported an increase in revenue almost across the board, helping it post a profit of $12.6 billion, up 52 percent from the same quarter a year earlier. Its customer deposits rose slightly in the first quarter from the previous quarter, particularly after smaller rivals saw depositors pull cash in droves, as inflows picked up, the bank said.
“We had a tough spell in March, but things are looking up now,” said Jeremy Barnum, chief financial officer at JP Morgan.
His boss, chief executive Jamie Dimon, who played a key role in bailing out smaller lenders, said the banking crisis was different, but financial conditions could tighten as lenders, including JP Morgan, became more conservative. “We’re going to have a recession eventually, but it could be a little bit longer,” he said.
Citigroup, the nation’s third-largest lender, reported a first-quarter profit of $4.6 billion, up 7 percent from the same period last year and beating forecasts. Revenue rose 12 percent from a year earlier, “despite a turbulent environment for banks,” Jane Fraser, the bank’s chief executive, said in a statement.
The bank’s loan book remained roughly unchanged and deposits declined by 3 percent from the previous quarter.
Wells Fargo beat analysts’ expectations, posting a profit of nearly $5 billion in the first quarter, up 32 percent from a year ago. Rising interest rates boosted the bank’s earnings as the bank’s loan portfolio grew due to gains in personal loans and higher credit card balances.
There was little sign of nervous depositors fleeing to the safety of the nation’s fourth-largest lender. Average deposits at Wells Fargo fell $24 billion, or 2 percent, from the prior quarter.
Charlie Scharf, the bank’s chief executive, said Wells Fargo was “pleased to be in a strong position to support the U.S. financial system” during the industry’s recent turmoil. He said the bank’s top priority was improving its internal controls; The bank has been under fire from regulators for years and has paid billions in fines for various wrongdoings.
The bank’s chief financial officer, Michael P. According to Santomassimo, Wells Fargo “did not significantly change our credit risk” last quarter as Wells Fargo is closely watching banks for signs of credit tightening that could lead to a credit crunch.
“Consumers and many of the businesses that are our customers have come into this environment in a very strong position,” he said. “Consumers continue to spend.”
PNC Financial, the nation’s sixth-largest bank, said industry volatility played to its strengths. Although it has been swept up in the turmoil surrounding midsize banks, PNC, a so-called super regional lender, is bigger and more diversified than its smaller rivals. PNC acted as rescuer in the rescue plan for ailing First Republic Bank last month, Mr. The bank paid a $1 billion deposit as part of a $30 billion deal engineered by Dimon.
PNC’s deposits grew slightly last quarter — but down from a year ago — while its net income rose to $1.7 billion, up 9 percent. Its revenue fell 3 percent to $5.6 billion, which the bank attributed to higher financing costs.
Investors welcomed the set of bank reports, their first glimpse into the books of industry bellwethers since the failure of Silicon Valley and Signature Bank, sending stock prices higher. Shares in JPMorgan rose 6 percent in premarket trade, leading gains among banks.
“The banking system is very stable — it’s stable,” Loyal Brainard, director of President Biden’s National Economic Council, said at an event in Washington this week. “The core of the banking system consists of a large amount of capital.”
But Federal Reserve staff predicted a general banking meltdown would trigger a recession later this year, according to minutes from last month’s policymakers’ meeting. “Based on their assessment of the potential economic consequences of recent banking sector developments, the staff’s forecast during the March meeting included a mild recession beginning later this year, with a recovery over the next two years,” the minutes show.
