O JP Morgan (JPMC34), the largest US bank, is thriving in a world of rising interest rates that have sunk some of its smaller peers, posting a 52% rise in first-quarter profit and record revenue.
Profits also increased in Citigroup (CTGP34) and not Wells Fargo (WFCO34). All three big banks were boosted by charging higher rates on loans without raising the rates paid to depositors as much.
They also benefited from panicked depositors fleeing midsize banks after the collapses last month of Silicon Valley Bank and Signature Bank raised customer alarms about the health of regional banks.
While the government has stepped in to largely insure deposits at SVB and Signature Bank, many customers have decided in recent weeks that they prefer to keep their money in banks deemed too big to fail.
Together, the three banks reported more than $22 billion in profits, an increase of more than a third from the prior year. Combined revenue was more than $80 billion, up 19% year-over-year. All three banks beat Wall Street expectations for earnings and earnings per share. JPMorgan shares jumped 7% on Friday, the pace of their biggest daily gain since 2020. Citigroup rose 4%. Wells Fargo is down less than 1%.
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JPMorgan’s net interest income – what it earns on loans less what it pays to depositors – rose 49% to a record $20.71 billion. At Wells Fargo, it was up 45% and at Citigroup it was up 23%, both to more than $13.3 billion. For 2023, JPMorgan now expects to earn about $81 billion on a net interest income measure, up $7 billion from its forecast three months ago.
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Gains appeared throughout their results. JPMorgan’s consumer business grew by 80% profit year-over-year, while its business targeting midsize companies and wealthy individuals also benefited. At Citigroup, revenue from the global cash management business for multinational clients increased 31%, while global currency and interest rate trading increased 13%.