US banks make solid start to Wall Street earnings season.
President Donald Trump’s deep tax cuts and a rise in interest rates helped a trio of Wall Street’s largest banks make a solid start to earnings season in the US.
JP Morgan, Citigroup and Wells Fargo all reported leaps in third quarter net profits, as lower credit costs and a resilient mortgage market helped boost their finances.
Wells Fargo – which is trying to rebuild its reputation following a string of scandals – led the way with profits up a third to $6bn (£4.6bn). At JP Morgan profits were up 24pc to $8.4bn, while Citigroup pushed them up 12pc to $4.6bn.
However, JP Morgan chief executive Jamie Dimon warned that banks faced “increasing economic and geopolitical uncertainties, which at some point in the future may have negative effects on the economy.”
Among the risks he cited were trade tensions, Brexit, economic turmoil in Italy and interest rates rising faster than expected.
CREDIT: BRIAN SNYDER/REUTERS
“In general those things don’t necessarily derail the U.S. economy, but they are all out there. No one should be surprised if it happens down the road,” he added.
JP Morgan and Citi’s investment banks suffered more disappointing trading over the period, but the decline in revenues at JP Morgan was more modest than analysts had feared.
Analysts at Keefe, Bruyette & Woods said the results looked “positive-ish” for European investment banking rivals such as Credit Suisse, Deutsche Bank and Barclays who will all report results in the coming weeks.
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