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U.S. banks beat profit estimates on economic rebound, red-hot markets

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WASHINGTON, Oct 14 (Reuters) – The 4 largest U.S. shopper banks posted one other robust quarter this week because the rebounding financial system allowed them to launch additional cash they’d put aside for pandemic losses, whereas scorching offers, fairness financing and buying and selling exercise additionally boosted their backside traces.

JPMorgan Chase & Co (JPM.N), Citigroup (C.N), Well Fargo & Co (WFC.N) and Bank of America Corp (BAC.N), seen by analysts and economists as bellwethers of the broader financial system, reported a mixed profit of $28.7 billion for the third quarter, beating analyst estimates.

Much of that was pushed by the discharge of a mixed $6 billion of funds the banks had put apart for pandemic mortgage losses which haven’t materialized due to extraordinary authorities stimulus, help packages and mortgage reimbursement holidays.

With the nationwide vaccination roll-out permitting Americans to get again to work and resume socializing after 19 months of pandemic-related enterprise closures and journey restrictions, shopper spending has boomed, the banks mentioned.

Loan progress, a key metric closely-watched by analysts, was combined throughout Wall Street nevertheless. Some lenders are nonetheless struggling to develop their mortgage books as shoppers and companies, flush with money from authorities help packages, proceed to pay down loans.

Overall, although, executives had been cautiously optimistic that the financial system is on a wholesome trajectory.

“The recovery from the pandemic continues to drive corporate and consumer confidence,” Citigroup CEO Jane Fraser mentioned in a press release. “And while strong consumer balance sheets have impacted lending, we are seeing higher consumer spending across our cards products.”

JPMorgan mentioned mixed debit and bank card spend was up 26% year-on-year, whereas card fee charges stabilized contributing to modest card mortgage progress. At Bank of America, mixed credit score and debit card spend was up 21%.

Spending on Citi-branded bank cards within the United States jumped 24% from a yr earlier, however with so many purchasers paying off balances internet curiosity income from bank card accounts fell 3%. In an indication that the development could also be turning, internet curiosity income on the playing cards was up 5% from the second quarter.

Sizzling capital markets over the previous six months have additionally buoyed the nation’s largest lenders, with simple financial situations driving record-breaking volumes of each mergers and acquisitions (M&A) and preliminary public choices, fueling charges.

Investment banking big Morgan Stanley Inc (MS.N)crushed estimates on Thursday, reporting a $3.58 billion profit, up almost 38% on the year-ago-quarter. That was thanks largely to a document $1.27 billion in revenues from advising from advising on offers. learn extra

“The investment bank, itself, and M&A, is on fire,” Gorman mentioned in an interview with CNBC after the outcomes. “We’ve got global GDP growth, enormous fiscal stimulus, record low interest rates. People want to transact.”

The spotlight for JPMorgan’s third quarter was additionally its Corporate & Investment Bank division, the place advisory charges nearly tripled as a result of robust M&A and fairness underwriting. All informed, that division reported a 6% rise in internet income to $12.4 billion. learn extra

At Bank of America, income from its equities division rose 33% year-on-year, pushed by progress in consumer financing actions and robust buying and selling efficiency, whereas Citigroup mentioned revenues for its fairness markets enterprise had jumped 40%. learn extra

Goldman Sachs (GS.N), Wall Street’s most prolific dealmaker, will wrap up financial institution earnings season on Friday.

While shopper spending and capital markets shone, mortgage progress remained combined.

JPMorgan mentioned on Wednesday that, on common, loans had been up 5% throughout the financial institution in contrast with final yr, whereas Bank of America, Citi and Wells Fargo reported declines in mortgage progress year-on-year.

Writing by Michelle Price; reporting by Anirban Sen, Noor Zainab Hussain, Matt Scuffham, David Henry, and Elizabeth Dilts
Editing by Nick Zieminski

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FILE PHOTOS: Signs of JP Morgan Chase Bank, Citibank and Wells Fargo & Co. bank are seen in this combination photo from Reuters files.   REUTERS/File Photos

People walk past a Citibank branch in New York October 15, 2013.   REUTERS/Andrew Kelly/File Photo

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