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JPMorgan Chase, Wells Fargo, and Citigroup walk into a bar—and things are looking up.
In the first batch of big bank earnings out Friday, Wells Fargo and JPMorgan both reported second-quarter beats on the top and bottom line. And Citigroup, with a few hiccups, also posted better-than-expected earnings, helping to paint a resilient portrait for big banks, even as turmoil continues among regionals.
Among these heavy-hitters, JPMorgan was a standout, with net income climbing 67% to $14.5 billion on the back of its First Republic acquisition. Wells Fargo posted net income of $4.9 billion, while Citi’s net income fell 36% to $2.9 billion.
“Markets revenues were down from a strong second quarter last year, as clients stood on the sidelines starting in April while the US debt limit played out,” Citi CEO Jane Fraser said in a statement, adding that the “long-awaited rebound in investment banking has yet to materialize.”
Outside of Citi’s woes, the general consensus from this batch of bank earnings is one of unexpected positivity. “What we’ve seen out of big bank earnings, especially JPMorgan, is pretty resilient,” Scott Ladner, chief investment officer at Horizon Investments, told CNBC. “We’re seeing right now [that] default rates are still historically incredibly low and not showing signs of skyrocketing higher.”
JPMorgan CEO and chairman Jamie Dimon also spotlighted economic positives in his earnings remarks. “Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly,” Dimon said in a statement. “Labor markets have softened somewhat, but job growth remains strong.”
But he also stressed “salient risks in the immediate view,” including core inflation, consumers using up their cash buffers, and the ongoing war in Ukraine. And when asked in a call with reporters if cooling inflation eased recession fears, he said there was still enough uncertainty that he didn’t know “if it’s going to lead to a soft landing, a mild recession, or a hard recession.”
JPMorgan CFO Jeremy Barnum also maintained uncertainty as to whether or not the Federal Reserve can thread the needle and execute a soft landing. “Your guess is as good as ours,” Barnum said to reporters, explaining that despite “euphoria about immaculate disinflation” on the back of the latest CPI report, it’s still too early to call. As for the banking crisis, however, Barnum was optimistic, saying that “it seems like we are through the worst of it.”