Friday , 14 June 2024
Home Global Economy Profits of the US big banks are dwindling
Global Economy

Profits of the US big banks are dwindling

Two major US banks let us look at their books today and the numbers are sobering. JPMorgan Chase earned $8.6 billion from April to June, down 28 percent from the same period last year. This was mainly due to the poorer economic prospects due to the crisis surrounding the Ukraine war and the sharp rise in inflation, to which the bank reacted with higher risk provisions for impending loan defaults. Analysts had expected a less severe drop in profits.

There are several risk factors at once

On the revenue side, JPMorgan reported a slight year-over-year increase in revenues under management, up 1 percent to $31.6 billion. However, the development in the different areas differed significantly: while net interest income increased by almost a fifth, other income fell by twelve percent. This was due, among other things, to declining fee income in investment banking.

In his outlook, CEO Jamie Dimon highlighted several risk factors such as geopolitical tensions, high inflation, dwindling consumer confidence and "unprecedented" quantitative monetary tightening as a threat to global economic growth. He had recently warned of an economic "hurricane". In order to save money, the group is temporarily suspending the multi-billion dollar buyback of its own shares announced in April in order to meet higher capital requirements.

Morgan Stanley also earns less

Morgan Stanley also suffered a sharp drop in profits in the second quarter. Net income fell 30 percent from the same period last year to $2.4 billion. Earnings fell 11 percent to $13.1 billion. Analysts had expected better numbers.

Trading in securities flourished, also because of the high price fluctuations caused by fears of inflation and recession. But investment banking revenues — including fees for servicing IPOs and mergers — plummeted 55 percent. Wealth management also weakened.

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles

Global Economy

Spotlight on 2023: S&P 500 and the Significance of the 4400 Level

In our past exploration of the financial landscape of 2023, we delved...

Global Economy

AI and Data Analytics Drive Efficiency in Money Laundering Detection

BIS Innovation Hub Turns to Tech for Money Laundering Detection The BIS...

Global Economy

Russell 2000 Gains Momentum as Tech Stocks Outperform Value

Tech stocks have dominated the equity markets in recent months, surpassing value...

Global Economy

Crypto Exchange Bybit Announces Exit from Canadian Market Amid Regulatory Changes

Regulatory Shifts Prompt Bybit's Strategic Withdrawal from Canadian Crypto Market