The US financial institutions are recovering from the corona crisis.
(Photo: dpa)
new York As a result of the government’s economic stimulus programs during the pandemic, consumers and businesses did not take out loans. The increase in the delta variant also delayed the return to normalcy, and economic activity slowed down. Now the big US banks are likely to find their way back. Your quarterly figures show strong boosts in profits:
Bank of America
Bank of America posted a jump in profits for the third quarter thanks to further lower loan loss provisions and growth in the consumer business. Net profit climbed to $ 7.26 billion from $ 4.44 billion a year ago – an increase of more than 63 percent, as the financial institution announced on Thursday. A surplus of 85 cents was achieved per share. Analysts, on the other hand, had only expected an average of 71 cents per share. The earnings of the financial group increased by 12 percent to $ 22.8 billion.
As in the second quarter, the bank benefited from the fact that, in view of the consolidating economic recovery, it was able to release a risk provision for bad loans in the billions. This time it was around $ 1.1 billion. In 2020, at the height of the Corona crisis, the bank set aside billions to prepare for a wave of loan defaults.
The numbers from Bank of America are doing well on the stock market. The share continues to rise on the German stock market after a friendly start and is currently almost three percent up.
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Morgan Stanley
Good deals with mergers and acquisitions boosted US bank Morgan Stanley’s earnings in the third quarter. Net profit rose in the three-month period to the end of September to $ 3.58 billion from $ 2.6 billion a year ago – an increase of around 38 percent, as Morgan Stanley announced. The financial group achieved a profit of 1.98 dollars per share. Analysts were expecting an average of just $ 1.68. Net income increased to $ 14.75 billion from $ 11.72 billion a year ago. The bank thus achieved a personal record quarter.
“We had an outstanding performance with our integrated investment bank,” said CEO James Gorman. Income in this business area rose by 67 percent. Morgan Stanley achieved record revenues in the consulting business. Competitor JP Morgan had also spoken of flourishing business advising companies on mergers and acquisitions. However, things did not go as smoothly in the Fixed Income division, whose earnings in the third quarter fell by 16 percent compared to the same period of the previous year.
Wells Fargo
Wells Fargo also exceeded analysts’ expectations in the third quarter. Fading concerns about possible loan defaults brought the US bank Wells Fargo a strong profit jump in the summer. Given the recovery of the economy from the Corona crisis, the bank released provisions for impaired loans in the amount of 1.4 billion US dollars, as it announced in San Francisco on Thursday.
A year earlier, she had set aside nearly $ 770 million on loan defaults. Mainly because of this, the institute’s profit jumped 59 percent year-on-year to $ 5.1 billion.
However, Wells Fargo suffered a drop in revenues of 2.5 percent to $ 18.8 billion. In addition, the scandal about bogus account openings with $ 250 million had another negative impact. Wells Fargo had admitted in 2016 that employees had been opening bank and credit card accounts on a grand scale for years that weren’t authorized by customers. The affair has already cost the bank more than $ 5 billion.
“The significant shortcomings that existed when I arrived must remain our top priority,” Scharf said in the statement. “We’re a different company today and the changes we’ve made allow us to be much more disciplined than in the past.”
Wells Fargo shares rose 1.1 percent to $ 46.57 in early trading on Wall Street.
Citigroup
Growth in investment banking and the economic recovery gave Citigroup a tailwind in the third quarter. The US financial giant increased its earnings by almost half in the past quarter. The bottom line was that the group earned $ 4.6 billion (almost four billion euros), 48 percent more than a year earlier. In the meantime, the income remained practically at the previous year’s level with 17.2 billion dollars.
Like its rivals, Citigroup’s results exceeded analysts’ expectations. The shares rose by almost two percent before the IPO.
She was satisfied with the profit given the current market environment, said Citi boss Jane Fraser. The economy and private consumers have recovered from the corona pandemic and companies have a greater need for capital market products. Investment banking revenues rose 39 percent to $ 1.9 billion. Stock trading did particularly well.
The bond business, on the other hand, remained below the previous year’s level, as expected. Revenues also fell in the retail and corporate business, which was also related to the sale of the consumer business in Australia. Overall, revenue fell 1 percent to $ 17.2 billion. Adjusted for the sale of the Australian business, total income rose by three percent.
More: JP Morgan again surprises with good quarterly figures – What drives the business of the large US banks