After record profits, JPMorgan watched on its costs

Published on 14 Jan. 2022 at 18: 36

American banks are putting their annual accounts in order. After having massively provisioned in 2019 to protect themselves from payment defaults with their customers, they took over a good part of their reserves last year . What consolidate their results last year. JPMorgan, which opened the ball for Wall Street banks on Friday, posted a net result of 48,3 billion over the year, up 48% compared to 2020.

Citi and Wells Fargo, which also published their results on Friday, are on the same trend. Led since last March by Jane Fraser, Citi recorded a net profit of 22 billion dollars over the year, doubled compared to 2020. Its revenues, at 71, 9 billion dollars in turnover, on the other hand fell by 5% over one year. . The CEO, who wants to make Citi more “efficient”, is especially expected on the recovery of the rate of return on equity (RoE). It returned to , 5% last year, against 10,3% in 2019, but stays away from champion JPMorgan (19 %).

Wells Fargo, which had led Charlie Sharf in 2019 to hand over the bank to aplomb after a scandal, published a net result of 21,5 billion dollars, against 3.37 billion dollars in 2020. Its revenues grew 5.7% over one year, to 78,5 billion dollars (+5.7%).

Mergers & Acquisitions

The banks profited from massive public aid, which limited the bankruptcies of the companies. In addition, it benefits from increasing deposits with their individual customers, and frenzied consumption, which has boosted the credit card business. The real estate market has also been dynamic, but, in other areas, lending activity has sometimes been hampered by shortages, such as in the automotive market.

Number one in the market by the size of its assets, JP Morgan has benefited from mergers and acquisitions at an “unprecedented” level: they have boosted its commissions by 48% in the fourth quarter. “The economy continues to do well despite headwinds from the Omicron variant, inflation and supply chain bottlenecks,” JP Morgan CEO Jamie Dimon said in a statement. .

Cost increase

Investors nevertheless pushed back the price of JPMorgan shares when the results were announced, visibly disappointed by the performance of trading activities at the end of the year. If the bank has achieved an even better net result than in 2019, already record (36 billion dollars), its costs increased more faster than its income last year (4.7% against 1%). Citi also saw its costs jump 9% last year.

With an announced increase in technology investments and a tight job market that is pushing wages up, the evolution of spending by analysts will be scrutinized closely. JPMorgan expects spending to increase by more than 8% this year, to 77 billion dollars. According to UBS analysts, this forecast clearly exceeds the consensus. Despite inflation, Jamie Dimon says he is “optimistic” for 2022, with in particular a credit market deemed “healthy” and “consumers (who) benefit from the growth in employment and wages”.