Wall Street
Citigroup bucks the trend, with profits falling 36% to $2.92 billion
Dubai – Al Arabiya.net
Posted on: July 15, 2023: 12:02 PM GST Last updated: July 15, 2023: 01:19 PM GST
“JP Morgan Chase” and “Wells Fargo” banks recorded strong profits in the second quarter of 2023, thanks to higher interest rates, while “Citigroup” profits declined.
Wall Street banks benefited from the rise in US interest rates, which reached a level between 5% and 5.25%, after increasing them 10 times in a row since March 2022.
JPMorgan Chase announced a larger-than-expected jump in second-quarter earnings, as it gained more interest payments from borrowers and benefited from the First Republic purchase.
Net interest income, boosted by the deal and the US central bank’s rate hike, was $21.9 billion, up 44%, or 38% excluding the impact of the First Republic deal.
The bank expected net interest income of about $87 billion for the full year, exceeding Wall Street’s expectations of $83.37 billion, according to Refinitiv data.
The bank’s profit jumped 67% to $14.47 billion, or $4.75 per share, in the quarter ended June 30.
Excluding one-off costs, the bank earned $4.37 per share, above analysts’ average estimate of $4 per share.
Wales graduates
Wells Fargo announced that its profits grew 57% in the second quarter of the year and raised its annual forecast for net interest income.
Net interest income increased 29% to $13.16 billion, thanks to the rise in the interest rate with the increase in the cost of borrowing at Wells Fargo and other banks after the Federal Reserve (the US Central Bank) raised interest rates several times to curb inflation.
Wells Fargo, the fourth-largest US bank, said it expects net interest income to rise 14% compared to $45 billion last year. The bank had previously expected net interest income to grow by 10%.
Wells Fargo reported earnings of $1.25 per share for the three months ended June 30, which beat analysts’ average estimate of $1.16 per share, according to Refinitiv data.
The bank set aside provisions for credit losses of $1.71 billion in the second quarter, compared with $580 million a year earlier.
Citigroup profits drop
Citigroup announced that its profits fell in the second quarter of the year, affected by the cost of laying off employees and increasing provisions for credit losses.
The bank said net income plunged 36% to $2.92 billion, or $1.33 per share, in the three months ended June 30, attributing the higher cost of layoffs and higher provisions for credit losses.
Revenue from markets fell 13% to $4.6 billion, while investment banking fees fell 24% to $612 million.
Net interest income jumped 18%. Net interest income measures the difference between the interest a bank earns on loans and that it pays on deposits.
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2023-07-15 08:02:00
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