US banks are under pressure because of the consequences of the Ukraine war.
(Photo: Reuters)
new York The profit of the American investment bank Morgan Stanley shrank in the first quarter. The Wall Street money house announced on Thursday that net profit fell to $3.5 billion (previous year: $3.98 billion) in the period from January to March.
Morgan Stanley earned $2.02 per share, down from $2.19 a year earlier. Bank chief James Gorman said the institution has done well despite a volatile market and economic uncertainties.
Earnings fell to $14.8 (15.7) billion in the quarter. In investment banking they shrank to around 7.7 (8.6) billion dollars. Last year, Morgan Stanley benefited from a veritable boom in mergers and acquisitions.
Wells Fargo profits plummet by a fifth
The major US bank Wells Fargo recorded a significant drop in profits at the start of the year. Soaring inflation and rising interest rates, as well as concerns about the potential economic impact of the Ukraine war weighed on business.
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Profits shrank in the first quarter within a year by more than a fifth to 3.67 billion dollars, as the San Francisco-based fourth-largest bank in the USA announced on Thursday. The institute made a profit of 88 cents per share after $1.02 per share certificate a year earlier. However, analysts had only expected an average of 80 cents per share.
Internal indicators continued to point to the financial strength of customers, explained bank boss Charlie Scharf. However, the US Federal Reserve has made it clear that it will take the necessary steps to lower inflation. “And this will certainly reduce economic growth,” warned Scharf.
Inflation in the US climbed to 8.5 percent in March. In addition, there are further risks from the Ukraine war, said Scharf.
The bank’s total revenues fell 5 percent year-on-year to $17.59 billion in the January-March period. Analysts had expected $17.8 billion.
Profit also shrinks at JP Morgan
After Wells Fargo and Morgan Stanley, the financial houses Goldman Sachs and Citigroup will also open their books this Thursday.
JP Morgan had already started with the quarterly figures on Wednesday. America’s largest bank reported a 42 percent slump in profit for the first quarter on a yearly basis and increased provisioning for the first time since the pandemic began to prepare for defaulting loans. The money house felt the high inflation, rising interest rates and the consequences of the Ukraine war in various ways.
Investment banking came to a virtual standstill with the start of the war. The volume of announced and completed mergers and acquisitions fell to its lowest level since the beginning of the pandemic, according to data from the analysis house Refinitiv. Investment banking revenue fell 28 percent to $2.1 billion in the first quarter.
The granting of new mortgage loans fell by 37 percent in view of the significantly higher interest rates. Trading sales fell by three percent and, at $8.75 billion, were a good $1 billion higher than initially expected. JP Morgan announced a $30 billion buyback program.
More: JP Morgan profit slumps in first quarter