The season of the quarterly reports of American banks started today, officially starting the season of US profits, with the accounts of the main banks. The fourth quarter 2023 accounts of JPMorgan, Citigroup, Bank of America, Wells Fargo were released today, while those of Goldman Sachs and Morgan Stanley will be released next Tuesday.
JPMorgan makes less profit due to the costs of failed banks
JPMorgan, the number one bank in the United States managed by CEO Jamie Dimon, announced that it reported in the fourth quarter of 2023 earnings per share of $3.04, on revenue of $39.94 billion.
JPMorgan reported to be precise net profit down 15% on an annual basis, to 9.3 billion, or 3.04 per share, compared to 11 billion, or 3.57 per share, in the same period last year.
Net profit fell due to charges that the group had to pay, amounting to 2.9 billion dollars, following the assessment launched by the FDIC, the Federal Deposit Insurance Corporation, on the costs incurred to take control of the US regional banks that failed in March 2023.
JPMorgan played a crucial role by acquiring the remains of First Republic, US regional bank ended up in the storm.
Returning to the accounts for the fourth quarter of 2023, excluding extraordinary charges, JPMorgan’s EPS stood at $3.97, well above the estimates developed by analysts interviewed by FactSetequal to $3.35 per share.
JPMorgan’s turnover it rose by 12% to 39.94 billion, almost equal to the 39.78 billion estimated by the consensus.
The burdens linked to Argentina and Russia are weighing on Citigroup
The accounts of Citigroup were affected by the charges the bank incurred in the fourth quarter of 2023, due to the bank’s exposure to Argentina, in particular with the expected losses for the business in the country, in the wake of the devaluation of the peso decided by the Milei government.
Those surprise charges led Citigroup to close the last quarter of 2023 at a loss, as confirmed by the quarterly report just released.
The bank led by CEO Jane Fraser has indeed announced a loss of 1.8 billion dollars and decided to cut 20 thousand employees.
The earnings per share on an adjusted basis, equal to 84 cents per share, may among other things not be able to be compared to the 81 cents per share expected by the consensus.
Citigroup’s turnover it amounted to 17.44 billion in the fourth quarterbelow the 18.74 billion expected by consensus.
Bank of America’s declining numbers
He published the accounts also the other American banking giant, Bank of America. Net income fell in the fourth quarter to 3.1 billion, down more than 50% compared to 7.1 billion the same period last year. However, the EPS was better than expected, at 0.70 compared to the 0.68 expected by the consensus.
To the bank, based in Charlotte, North Carolina, announced that its net interest margin (NII) fell 5% to $13.9 billion, as higher deposit rates and lower deposits more than offset higher asset yields.
The legacy of the US banking crisis on Wells Fargo
Bad too Wells Fargo. The bank announced that it ended the fourth quarter of 2023 with net income of 3.45 billion, or 86 cents per share, up slightly from profits of 3.16 billion, or 75 cents per share in the same period of 2022.
Profits were depressed by an overall charge of 1.9 billion, or 40 cents per share, also linked to the special assessment launched by the US Deposit Guarantee Fund.
Also having an impact of 969 million, or 20 cents per share, linked to the support of liquidation costs. That said, the bank also benefited from a tax credit of 621 million, or 17 cents per share.
Also depressing Wells Fargo’s shares is the boom in provisions, which the bank had to make in view of credit losses (non-performing loans and non-performing loans or also NPLs, Non-Performing Loans). Provisions actually rose 34% to $1.28 billion from $957 million in the fourth quarter of 2022.