NEW YORK: Large US banks reported higher third-quarter earnings on Friday, reflecting the benefits of higher interest rates for the financial sector with little of the downside that has worried financial markets this week.
Shares of JPMorgan Chase, Citigroup and Wells Fargo all rose in pre-market trading following the stream of reports, the unofficial kickoff of earnings season.
The results come on the heels of a two-day stock market rout sparked in part by a sudden rise in 10-year US Treasury bond yields.
Banks typically win higher profits from interest rates but the sell-off this week reflects worries that spiking interest rates could shock the global economy.
“The economy is still very strong,” said JPMorgan Chief Executive Jamie Dimon, who said the rise in interest rates thus far was unsurprising in light of a strengthening US economy and not worrisome at this point.
In the bank’s statement, Dimon had warned of a potential economic hit from “increasing economic and geopolitical uncertainties.”
And in a conference call with reporters, Dimon offered a litany of concerns, including trade conflicts, Brexit, the unwinding of quantitative easing stimulus programs and geopolitical concerns from Italy and Saudi Arabia that were worrisome but had yet to derail growth.
“So far, we have a strong economy despite these overseas geopolitical issues bursting all over the place,” he said.
Net income at JPMorgan for the three-month stretch was $8.4 billion, up 24.5 percent.
Revenues gained 5.2 percent to $27.8 billion.
In consumer banking, gains in the credit card and auto loans segment helped offset a drop in revenues in home lending.
JPMorgan experienced mixed results in its trading business, with fixed income trading suffering a drop while equity markets, emerging markets and commodities all rose.
Citigroup reported an 11.8 percent rise in profits to $4.6 billion, pointing to growth in South America as a particularly good area.
Revenues dipped 0.2 percent to $18.4 billion.
Wells Fargo reported third-quarter profit of $6.0 billion, up 32.2 percent from the year-ago period, boosted by higher interest income and lower expenses.
Revenues inched up to $21.9 billion from $21.8 billion in the year-ago period.
Wells Fargo has revamped its employee incentive systems and replaced executives following a fake accounts scandal that surfaced in 2016.
Chief Financial Officer John Shrewsberry pointed to some positive business trends, including growth in primary consumer checking customers and increased debt and credit card usage.
But overall commercial and consumer loans fell compared with the second quarter and with the year-ago period.
Shares of JPMorgan advanced 1.7 percent to $110 in pre-market trading. Citigroup rose 2.8 percent to $70.30, while Wells Fargo climbed 1.3 percent to $52.10. —AFP