Big banks bolster view of upbeat economy
Wall Street’s biggest banks produced a rosy picture of the economy Friday as businesses took out a greater number of loans than anticipated and heightened trading boosted the fortunes of two of the country’s largest banks.
JPMorgan Chase and Citigroup both beat analysts’ estimates for the three-month period ending June 30.
JPMorgan, the largest bank in the country, saw profit rise 18 percent from last year, to $8.3 billion, while Citi’s profit was driven up 16 percent, to $3.9 billion — both from the boost in business loans.
The results were a confirmation that last year’s tax cuts and rising investor confidence are a boon for Wall Street.
“If you’re looking for potholes out there, there are not a lot,” Jamie Dimon, CEO of JPMorgan Chase, said during a conference call with analysts.
The optimism wasn’t shared by all companies, though.
Wells Fargo, which was rocked by about a dozen different investigations into its toxic sales culture, saw its profits fall 11 percent, as legal costs related to regulatory matters ate away at returns.
The results made the bank look “rather hapless,” Octavio Marenzi, CEO of consultancy Opimas, said in a note.
“It appears that the slew of scandals that Wells Fargo has been involved in are taking their toll,” he added.
While businesses appeared to be doing well, the bank earnings showed a different picture for individuals.
Wells Fargo’s mortgage unit saw revenue drop by 33 percent, to $770 million, from $1.15 billion the year before. JPMorgan likewise saw a 20 percent drop in fees and income related to mortgages, to $324 million.
Next week, Bank of America, Goldman Sachs and Morgan Stanley will report their results.
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