The US Federal Reserve wants to get inflation under control by raising interest rates. This carries the risk of stalling the economy, but plays into the hands of large financial groups when lending money.
New York – Despite the risks of a recession and the recent turbulence in parts of the financial sector, the big US banks JPMorgan Chase, Citigroup and Wells Fargo got off to a good start in the new year. The financial institutions benefit from the course of the central bank, the Fed, whose interest rate hikes in the fight once morest high inflation make lending significantly more lucrative. The industry leader JPMorgan earned around 12.6 billion dollars (11.4 billion euros) in the first quarter, 52 percent more than a year earlier, as announced on Friday in New York. This was well received by investors, and the stock rose by five percent at the start of US trading.
The net interest income of the largest US money house jumped by almost half to $ 20.8 billion. Total revenues under management grew by a quarter to more than $39.3 billion. With its numbers, the bank exceeded the average expectations of analysts. JPMorgan also saw deposits pick up slightly following the March collapses of smaller US regional banks Silicon Valley Bank and Signature Bank caused concern. Insecure US customers brought their money to larger banks that are considered systemically important and are more strictly regulated.
Still prepared for downturn
However, even big banks like JPMorgan, which regulators rate as well capitalized, are gearing up for a downturn. In the first quarter, the major bank set aside almost $2.3 billion for impending loan defaults, more than one and a half times as much as in the same period last year. The management explained this with deteriorated economic prospects. While consumers in the US continue to spend money, and companies are in good shape, said JPMorgan boss Jamie Dimon. “However, the storm clouds that we have observed for a year remain on the horizon and the turmoil in the banking sector is adding to these risks.”
JPMorgan’s competitor Citigroup also earned well at the beginning of the year thanks to higher interest income. Net income increased in the three months to the end of March by seven percent year-on-year to $4.6 billion (4.16 billion euros), as the money house announced on Friday in New York. Overall, revenues grew 12 percent to $21.4 billion. With this, Citi exceeded expectations. The stock was up regarding 2 percent in early trading. Citi also increased loan loss provisions and set aside a good $240 million for impending loan defaults. At Wells Fargo, profits rose by almost a third to just under $5.0 billion (4.5 billion euros).
