RPT — BREAKINGVIEWS — Wall Street’s doomsayer is discordantly optimistic
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.) By Stephen Gandel NEW YORK, Oct 13 (Reuters Breakingviews) — JPMorgan boss Jamie Dimon is, as ever, worried. When presenting his bank’s third-quarter results on Tuesday, he bemoaned the US deficit, “sticky inflation,” housing prices and global tensions. Yet his lieutenants say that American consumers will do just fine, judging by the amount they’re penciling in for loan losses. Fellow gigantic lender Wells Fargo followed suit, with only Citigroup as a slight contrarian. It’s difficult to reconcile such optimism with talk of spiraling risks and padded buffers for corporate stumbles. Leading off Wall Street’s big results day, JPMorgan revealed that it had added just $50 million to its allowance for auto, home, credit card and other consumer loan losses, down 91% from the $575 million it added in the same period a year ago. Wells Fargo, which also reported on Tuesday, similarly slowed provisions. It might be hard to take a downbeat view when banks’ bottom lines continue to fatten. JPMorgan's net income was up $912 million from a year ago, to $15.3 billion, with revenue from investment banking, asset
(The author is a Reuters Breakingviews columnist. ) By Stephen Gandel NEW YORK, Oct 13 (Reuters Breakingviews) — JPMorgan boss Jamie Dimon is, as ever, worried. When presenting his bank’s third-quarter results on Tuesday, he bemoaned the US deficit, “sticky inflation,” housing prices and global tensions. Yet his lieutenants say that American consumers will do just fine, judging by the amount they’re penciling in for loan losses.
Fellow gigantic lender Wells Fargo followed suit, with only Citigroup as a slight contrarian. It’s difficult to reconcile such optimism with talk of spiraling risks and padded buffers for corporate stumbles. Leading off Wall Street’s big results day, JPMorgan revealed that it had added just $50 million to its allowance for auto, home, credit card and other consumer loan losses, down 91% from the $575 million it added in the same period a year ago. Wells Fargo, which also reported on Tuesday, similarly slowed provisions.
It might be hard to take a downbeat view when banks’ bottom lines continue to fatten. 3 billion, with revenue from investment banking, asset management, and stock and bond trading all up by double digits. Wells Fargo’s earnings rose 6%, buoyed by an 11% increase in loans outstanding compared to a year ago. Citi’s 40% bump was flattered by a one-time loss last year.
Adjusting for that oddity reduces the uplift to a still strong 16%, powered in part by a strong showing from the bank’s wealth management division. Durable growth is the new mantra of Wall Street’s reformed swashbucklers. Steady rises in consumer divisions are indeed a handy tonic for apparent corporate perturbations. At Citi, JPMorgan and Wells Fargo, investment-banking fees fell 13%, 8% and 3%, respectively, compared to the prior three-month period, even if they’re still up year-over-year.
5 billion. Asked about the divergence, JPMorgan’s chief financial officer Jeremy Barnum said that it was mostly driven by business activity. Auto lending, for instance, slowed, while corporate lending was up. Still, the bank insists that consumers are doing just fine.
The economic factors that it uses to compute anticipated losses, Barnum maintained, have not changed. 3% a year ago — and soaring gas prices. It also clashes with Citi’s outlook, where consumer reserves rose by $207 million. Surveys of public sentiment are in the dumps.
Sensitivity to corporate angst seems increasingly out of step with Main Street blues. Follow Stephen Gandel on LinkedIn and X. Context News Three of the four largest US consumer banks — JPMorgan, Citigroup and Wells Fargo — reported their earnings for the third quarter on October 13. Net income rose the most at Citigroup, which was up 16% from a year ago, excluding a one-time charge in the year-ago quarter.
The bottom lines of JPMorgan and Wells Fargo rose 6% each. com)