Wall Street’s darlings kicked off earnings season with mixed results. JPMorgan Chase posted record profits, while Wells Fargo plummeted to a two-year low. Citigroup also warned of cost-cutting challenges ahead. Anticipations of falling interest rates, which would reduce a bank’s cost of lending, and a stronger-than-expected economy have sent JPMorgan and Citi’s stocks up nearly 20% this year. But mixed earnings sent all three stocks down, with dropping 6% for its worst day in three years.
- Citi’s consumer lending profits fell 74% from a year ago — with CFO Mark Mason noting slower consumer spending and lower account balances than pre-COVID (FT).
- One bright spot has been investment banking fees, which have started recovering this year, with advisory and underwriting fees reaching their highest point since 2021.
Wall Street feeling Main Street pains: Lending remains slow — and existing borrowers are struggling to repay. JPMorgan booked a $500M loss from offloading collapsing mortgage investments, while Wells Fargo’s bad debt loans shot up 70%. Retail banking is the sticking point, with Wells Fargo’s CFO noting that inflation is “having a big impact.” Dwindling deposits and credit losses are plaguing the industry as Americans struggle to afford everyday life.
