USA, a rich third quarter for almost all the large American banks
The policy of high interest rates and the recession that seems to arrive at any moment but never arrives seem to be good for the large American banks. After the complicated first half of the year, the quarterly reports showed, for the majority of them, record profits. More paid loans, fewer expected provisions and liveliness in the IPO and corporate transactions sector were the driving forces behind important results. Bank of America, Citi, JP Morgan, Wells Fargo, Morgan Stanley and Goldman Sachs had a global profit of over 34,000 million dollars in the third quarter of 2023 (+17% compared to 2022). JP Morgan achieved record results as did Wells Fargo which almost reached record profits and Bank of America. In contrast, Goldman Sachs, mired in real estate, saw profits decline as did Morgan Stanley. Citi hasn’t fully recovered from last year’s declines.
USA, JP Morgan on the earnings podium
On the podium JP Morgan Chase, the largest American bank, earned 13,151 million in the third quarter (+35%). The collapse of the banks linked to Silicon Valley led savers to enter the solidity of a historic bank. Rate increases, critical for medium-sized banks, allowed JP Morgan to increase revenues to record levels. Despite this, the CEO of the bank, Dimon, proved to be very cautious, saying that “We are faced with so many uncertainties that we cannot help but be very cautious. It is the most dangerous moment the world has seen in decades.” Bank of America, the second largest bank, also managed to gain share at the expense of other, weaker entities. “We have added customers and accounts across all lines of business. And we’ve done it in a healthy but slowing economy, where American consumer spending continues to be higher than last year but continues to slow,” said President Brian Moynihan. Bank of America achieved attributable consolidated net profit of $7.27 billion (+11%) thanks to rising rates. But the bank has accumulated losses in the bond portfolio (131 billion against the previous 116).
USA, big gains also for Wells Fargo
Great earnings, again due to high interest rates, for Wells Fargo, 5,767 million dollars (+61%). The bank, second in the mortgage segment after JP Morgan, issued one in three mortgage loans across the country. On your part, Citi improved its results by 2%, to $3,546 million in the third quarter, thanks to strong revenue growth, driven by rising interest rates and trading in fixed income securities and currencies. CEO Jane Fraser said that “Despite the headwinds, our five core interconnected businesses delivered revenue growth of 9%.” Goldman Sachs, on the other hand, has had eight consecutive quarters of declining profits, mainly due to the decline in revenues from investment banking activities. It was also burdened by its real estate investments, which caused a $212 million loss in its stock and further impairment of $358 million. As a result, consolidated profit fell 36% to $1,882 million. “We are confident that the work we are doing now will provide us with a much stronger platform for 2024. I also expect a continued recovery in both capital markets and corporate activity if conditions remain favorable. “As a leader in mergers and acquisitions advisory and equity underwriting, a pickup in activity will undoubtedly be a boon to Goldman Sachs,” said its president, David Salomon. Morgan Stanley, lastly, showed a drop in profits of 9%, to 2,408 million dollars.
Subscribe to the newsletter