US banks report mixed earnings as Wells Fargo lags again

Both of Citigroup’s main divisions, global consumer banking and institutional client services, had higher profits. — Reuters pic
Both of Citigroup’s main divisions, global consumer banking and institutional client services, had higher profits. — Reuters pic

NEW YORK, July 13 — Large US banks reported earnings that ran the gamut today, with JPMorgan Chase and Citigroup notching year-over-year increases while Wells Fargo’s profits fell.

Shares of the three banking giants retreated early today, with Wells Fargo falling by far the most.

JPMorgan Chase reported a solid second-quarter earnings jump today, benefitting from higher interest rates, loan growth and a better performance in some key trading divisions.

JPMorgan, the biggest US bank by assets, reported net income of US$8.3 billion (RM33.5 billion), up 18.3 per cent from the year-ago period.

Revenues came in at US$28.4 billion, up 6.5 per cent.

Highlights included increases in net interest income following a series of a Federal Reserve interest rate hikes and a rise in overall loans compared with the year-ago period, a sign of strengthening economic conditions.

Chief executive Jamie Dimon gave an upbeat outlook on business conditions, saying, “We see good global economic growth, particularly in the US, where consumer and business sentiment is high.

Citigroup reported an increase of 16 per cent in second-quarter profits to US$4.5 billion due to overall loan growth and lower tax payments. Both of Citigroup’s main divisions, global consumer banking and institutional client services, had higher profits.

Revenues came in at US$18.5 billion, up two per cent.

“These results demonstrate good momentum across our franchise and that we are firmly on track,” said Citigroup chief executive Michael Corbat.

The big laggard was Wells Fargo, which has still not completely found its footing following a fake accounts scandal that surfaced in 2016, prompting numerous fines, government probes and lawsuits.

Net income fell 11.4 per cent to US$5.2 billion. 

Wells Fargo reported a drop in overall deposits and loans. On the positive side, the company notched an increase in net interest income, indicating it also benefited from higher interest rates.

Wells Fargo has replaced key executives, revamped some pay incentive policies to improve governance and spent on marketing to emphasize these improvements.

“During the second quarter we continued to transform Wells Fargo into a better, stronger company for our customers, team members, communities and shareholders,” said Wells Fargo chief executive Tim Sloan.

Shares of JPMorgan fell 0.7 per cent in opening trading, while Citigroup drop 1.7 per cent and Wells Fargo tumbled 3.0 per cent. — AFP

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