Banks Power: Banks Have Just Recently Begun Reporting Earnings. What They’re Saying.

July 19, 2023

Banks Power: Banks Have Just Recently Begun Reporting Earnings. What They're Saying.

There may be concerns about the economy’s direction, but they have yet to be reflected in bank profitability.

During the second quarter, profits at JPMorgan Chase (JPM) and Wells Fargo (WFC) increased, showing banks power as rising interest rates continued to be a tailwind for several of the nation’s top lenders.

Going into this earnings season, Wall Street was cautious. Analysts at Keefe, Bruyette & Woods predict a 7% reduction in profits per share as banks compete with consumers under pressure from inflation and increased interest rates, creating an adverse environment for deal-making. So far, such concerns have not come true.

Banks have experienced a rise in net charge-offs — the share of debt that is unlikely to be repaid — compared to the previous quarter. However, executives said Friday’s levels aligned with a pre-pandemic economy more than a recessionary environment.

While many banks, large and small, will report financial results in the coming two weeks, the early indications for the industry are good, showing banks power.

JPMorgan reported a 67% increase in earnings year over year, aided partly by its May acquisition of struggling First Republic Bank. Wells Fargo’s earnings increased by 57%. Citigroup (C) fared less well, with a 36% decline in earnings due to a downturn in deal-making rather than distressed consumers. Its performance, however, exceeded The Street’s expectations.

For the time being, all attention is on net interest income, which the three fared well on, earning a total of $49 billion. Rising interest rates have benefited lenders since they may earn more money on their loans and are not under any major obligation to pay more interest to depositors. As a result, both JPMorgan and Wells Fargo raised their net interest income expectations for the year.

However, bank executives know that savers will not remain complacent for much longer, as net interest margins have already contracted quarter over quarter. JPMorgan’s net interest margin dipped to 2.62% from 2.63%, while Wells Fargo’s dropped to 3.09% from 3.2%.

In a discussion with analysts on Friday, Jamie Dimon, CEO of JPMorgan, said that he believes it is reasonable to conclude that most of our company has very little pricing power, and deposit betas will increase. You take that as a given.

Large banks like JPMorgan were seen as safe havens throughout the regional financial turmoil last spring, which saw the collapse of Silicon Valley Bank, Signature Bank, and First Republic. For a while, depositors were willing to give up higher deposit interest rates for the security of keeping their money in bigger, more dependable institutions. Banks currently have less pricing power, though, as the financial problems seem limited to a few problematic firms.

Banks, meanwhile, are facing regulatory headwinds as the Federal Reserve wants them to keep even more capital to cushion them against a prospective catastrophe, even though they have survived the previous three months uninjured.

As a result, banks would have less capital for lending and returning capital, potentially creating a sector overhang. Customers will have to seek alternate sources of finance if banks’ lending capacity is limited.

“This is great news for hedge funds, private equity, private credit, Apollo (APO), Blackstone (BX),” Dimon stated Friday when asked about Apollo’s recent record-high share price. “They’re out dancing in the streets.”

While bank investors have no cause to celebrate, they also have no reason to be concerned.

Subscribe Our Newsletter

3 Beaten-Down Tech Stocks That Could Be Set For a 2022 Comeback
3 Beaten-Down Tech Stocks That Could Be Set For a 2022 Comeback

Daniel Ives of Wedbush is upbeat about the future. According to the 5-star expert, the IT sector will propel the NASDAQ to a year-end objective of 19k in 2022. If he is correct, the index will rise by nearly 21%.

Stocks
money, bills, coins
Morgan Stanley Hires Two $1.3 million JP Morgan Private Bank Professionals

Morgan Stanley is continuing to hire salaried private banking teams to support its wirehouse broker hiring initiatives.

Banks and Finance
Get the ultimate solution: B2BinPay Get the ultimate solution: B2BinPay
Sponsored
Constantine

Top 5 Most Reliable KYC Technology Providers
The development of trade in the financial sector has contributed to the creation of numerous financial markets that offer incredible opportunities for enrichment.

discover
Why Do Brokers Need PAMM Accounts?

Liquidity Provider

Why Do Brokers Need PAMM Accounts?

In this article, we will take a look into what a PAMM account is, its functions, what value it brings to brokerages and to various types of investment firms, and describe some of the best and most efficient PAMM solution providers in the industry. We will also consider the features of such accounts and their advantages and disadvantages.

Trading
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Alexander

    What Is an Interest Coverage Ratio? How to Use This Financial Metric to Evaluate Company Health

    Interest Coverage Ratio Explained

    Hazem

    After-Hours Trading: Can You Trade After Financial Markets Close?

    After-Hours Trading Explained

    Alexander

    How to Scale a Crypto Exchange Business and Stay Competitive

    how to scale crypto exchange business

    Constantine

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Alexander

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Hazem

    Megaphone Pattern​: What Is It? How to Use It In Trading

    Megaphone Pattern​: How to Read & Trade with It

    Constantine

    Top 5 Liquidity Bridge Providers in DeFi

    Top 5 Liquidity Bridge Providers in DeFi

    Hazem

    Max Funded IUL Explained: Is It a Legitimate Financial Strategy?

    Understanding Max Funded IUL

    Alexander

    Tax Refund Timeline: When Will You Get Your Tax Return?

    how long does it take for tax refund

    Constantine

    Crypto Liquidity — What is it, and How to Measure It?

    What is Crypto Liquidity and How to Measure It?

    Constantine

    AI in Finance: A Game-Changing Trend Shaping the Industry

    AI in Finance

    Hazem

    5 Ways to Make Money with ChatGPT and Build Your Wealth

    Make Money with ChatGPT

    Constantine

    Top AI Companies to Invest in April 2025

    Top AI Companies to Invest in March 2025

    DeepSeek vs ChatGPT: Which AI Technology is Better For You?

    DeepSeek vs ChatGPT: Feature-by-Feature AI Tool Comparison

    Constantine

    Top Solana Meme Coins in 2025: Best Presales and Where to Buy

    Solana Meme Coins 2025

    Alexander

    How Renewable Energy Stocks Can Supercharge Your Portfolio

    How Renewable Energy Stocks Supercharge Your Portfolio

    SEC Crypto Regulations: What Financial Advisors Need to Know

    SEC Crypto Regulations: Insights for Financial Advisors

    Hazem

    The Cup and Handle Pattern – How Trade Using This Bullish Indicator?

    Cup and Handle Pattern – How to Predict Price Breakouts?

    Hazem

    Year-Over-Year (YoY): What It Means? How It’s Used in Finance?

    Year-Over-Year (YoY): How to Calculate Business Performance?

    Constantine

    What is WAGMI and NGMI? Understanding Crypto Slangs

    WAGMI vs. NGMI

    Alexander

    Litecoin Mining Guide: How to Get Started in 2025?

    Litecoin Mining Guide: How to Get Started in 2025?

    Constantine

    What is Thruster (THRUST): An Advanced AMM for the Blast Ecosystem

    Thruster (THRUST): How Does it Revolutionise DeFi?

    Constantine

    How Does Polymarket Work? Detailed Guide

    How Does Polymarket Work? Comprehensive Guide

    Constantine

    Coinbase vs. Сoinbase Pro: Which Platform is Right for You?

    Coinbase vs. Coinbase Pro
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.