Tuesday, January 18, 2022

WRAPUP 1 Investors are wary of bank growth, despite management optimism

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WASHINGTON, Jan. 14 () – U.S. major bank executives were optimistic about the economic outlook on Friday, signaling growth in some lending firms and rising consumer spending. investors were skeptical of the sector’s growth prospects.

JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co., the U.S. economy, reported total revenue of $ 19 billion in the fourth quarter, each much higher than analysts had estimated.

However, analysts say backups and other disposable items helped the blows, and the main performances weren’t as appealing.

The bank’s shares fell 2.1% overall, with Wells Fargo only in the top six amid concerns about declining trading earnings and rising credit growth.

“Investors are worried about where growth will come from,” said Viola Risk Advisors bank analyst David Handler. “There doesn’t seem to be much noise in the next quarter.”

Bank executives say the wave of Omicron infections, where 7% inflation and supply chain problems, the U.S. economy is still on a healthy trajectory.

While credit growth, which is a key indicator observed by analysts, is mixed, consumer loans and spending have increased.

“The consumer is very strong,” JPMorgan CEO Jamie Dimon told analysts. “… Omicron, despite supply chains, 2021 was one of the best growth years,” he said.

The average credit of JPMorgan, the country’s largest lender, rose 6 percent year-on-year, while total spending on debit and credit cards rose 26 percent. Loans at Wells Fargo fell 3 percent year-on-year, but grew 5 percent in the second half of 2021 due to consumer and commercial portfolios.

According to Chief Financial Officer Mark Mason, overall lending at Citigroup has been partly flat as corporations still have cash and other financing options, but credit balances on Citigroup brand cards in North America are higher than last year. Increased by 3 percent and costs by 24 percent. % high.

Bank of America Corp., the country’s other major consumer lender, reported earnings on Wednesday. “What we see in the three major banks we report today is not only a favorable environment for credit growth in the 4th quarter, but management teams hope it will continue in 2022,” said Jason War, chief investment officer of Albion Financial Group. Owns shares in JPMorgan.

However, investors are concerned that rising inflation may hurt consumer spending, but credit growth may not be higher than deposit growth, meaning that banks will move from the profitability curve as benchmark rates rise. can not use.

“It gives the impression that the economy is not as strong as we thought,” said Kate Buchanan, Atlanta’s Global Portfolio Manager.

COSTS, TRADE

Managers say inflationary pressures have also affected spending as banks face competition to hire and are forced to pay more to attract and retain talent.

“Recruitment has been very competitive across the business,” said Mason from Citigroup. “We’ve seen the pressure to pay to attract talent.”

JPMorgan and Citigroup’s Wall Street businesses were largely as successful as expected, both reporting major declines in sales. It was filled with another star quarter for the deals.

Morgan Stanley, Goldman Sachs Group Inc. and other Wall Street trading giants, will report next week on how the trading environment will look for the rest of the year.

Analysts are expecting a return to normal as the Fed slows down and eventually stops buying assets altogether.

“You won’t have a steady-income trading boom when corporations are rushing to refinance at lower rates at lower rates,” Handler said. (Additional report by Matt Skaffem, Megan Davis, Elizabeth Dilts, David Henry, Nur Zaynab Hussein, Niket Nishant, and Sinead Keru, edited by Nick Zieminski)

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