Two of the country’s largest banks, JPMorgan Chase and Citigroup, announced on Tuesday that their profits and revenues increased in 2019, a year marked by several interest rate cuts in the country, thanks to increased activity in their operations, especially in fixed income.
JPMorgan, the largest entity, obtained a net profit of 36,431 million dollars in 2019, an increase of 12% over the previous year; and an annual turnover of 115,627 million, which is 6% more year-on-year; in both cases adding record figures to the firm’s record.
The top executive of this New York-based bank, Jamie Dimon, highlighted the results of the fourth quarter, applauded by Wall Street analysts, in which profits shot up 21% to 8.25 billion, and revenues rose 9% to 28.33 billion, compared to the same period in 2018.
JPMorgan said in a note that profits from its investment banking business in the last quarter of the year rose a remarkable 48% and, in particular, fixed income operations shone with an 86% increase in profits.
“Although we continually faced a high level of geopolitical issues, overall growth has stabilised, albeit at a lower level, and the resolution of some business issues has contributed to client and market activity at the end of the year,” Dimon explained.
The Federal Reserve’s decision to cut interest rates three times in 2019 impacted the banking giant’s net interest income, which fell by 1% in the fourth quarter, but instead benefited from greater negotiation in the markets, which was also the result of reduced tensions with China.
Similarly, Citigroup had a good year in 2019, with an 8% rise in its annual profit to $19,401m and a 2% rise in turnover to $74,286m, also driven by the good performance of its investment banking in the last quarter.
In the fourth quarter, Citigroup’s net income rose 15% year-on-year to $4,979 million and its turnover increased 7% to $18,378 million. As for fixed-income operations, Citigroup provided the turnover figure: it increased by 49% to 2.9 billion.
On Tuesday, another major bank, Wells Fargo, also released its data. However, it continues to drag its feet with the authorities after the scandal over the opening of millions of false accounts and the alleged misrepresentation of the quality of loans used in residential mortgage-backed securities.
Wells Fargo earned $19.549 billion in 2019, down 13% from the previous year, and its quarterly profits fell 53% year-on-year due to “a backlog of litigation on a variety of matters”, amounting to $1.5 billion, according to its chief financial officer, John Shrewsberry.
Its new CEO and chairman, Charlie Scharf, admitted that his entity “has made some serious mistakes”, but he now intends to make “the fundamental changes necessary to regain the full confidence and respect of all stakeholders”.
The results of these three entities will be followed by those of Bank of America and Goldman Sachs tomorrow, Wednesday, and Morgan Stanley on Thursday, in what is considered the kick-off of the corporate accounts season, with which analysts measure the health of the US economy.
In this sense, analysts point out how big banks in general have revalued in the stock market by around 30% over the past year and warn that in 2020 the figures may not be as buoyant due to low interest rates, so they have expectations set in their business forecasts for this year.
At mid-session in the New York Stock Exchange, JPMorgan led the earnings in the Dow Jones Industrials group with an increase of 1.81%, while Citigroup rose by 2.57% and Wells Fargo dropped a remarkable 4.05%.