The president of the United States, Joe Biden, promised during the onset of the financial crisis in March 2023 that this time the bill would not be borne by the taxpayer. The Federal Deposit Insurance Corporation (FDIC) was assuming the bailouts and interventions that were necessary, but even then it warned that the bill would be passed on to the entities. This is a million-dollar bill, as demonstrated by the accounts of the large banks presented this Friday. JP Morgan has to assume $2.9 billion; Wells Fargo, 2.1 billion; Bank of America, 1.9 billion, and Citi, 1.7 billion. In total, 8.6 billion dollars (about 7.85 billion dollars) between the four main US entities.
JPMorgan Chase, the largest private bank in the world by stock market value, has emerged stronger from that year of financial turmoil. The entity led by Jamie Dimon took the opportunity to gain market share and to buy First Republic, one of the banks in crisis. In the end, the entity closes the year with record profits, according to the results presented this Friday, despite the fact that the fourth quarter result has fallen 15%, to 9,307 million dollars, precisely due to the contribution to the deposit guarantee fund.
For the year as a whole, profit rose an impressive 31.5%, to $49,552 million. This is due to a very strong 23% increase in revenues, up to $158,104 million, derived mainly from the rise in interest rates, but also from the increase in market share, both organically and due to the purchase of First Republic .
Banks have been lending money at higher rates without reflecting the rise in the price of money on deposits to the same extent, which has increased their margins. The strength of the income has allowed JPMorgan to absorb a 46% increase in provisions, to $9.32 billion.
The year 2023 was greatly marked by the fall of Silicon Valley Bank, which was followed by the crisis of Signature Bank and First Republic Bank. Other banks were fighting to survive when the market singled them out for their investments in fixed-income securities that had lost value with the rise in interest rates.
Faithful to its historical tradition, JPMorgan served as the anchor of the system. He orchestrated a first bailout injection and ended up purchasing First Republic Bank on very advantageous conditions. Banking crises usually end up causing more concentration in the sector, both due to customer movements and corporate rescue operations. JP MOrgan has increased its lead as the leader by size and profits.
Bank of America's accounts have gone awry at the end of the year. The entity led by Brian Moynihan earned $24,866 million in 2023, according to the accounts he published this Friday, compared to $26,015 million in the previous year. This 4.4% decrease is due to the fact that the attributable net consolidated result has fallen by less than half in the last quarter of the year (from 7,270 to 2,838 million dollars). Bank of America has had to assume a 2.1 billion bill from the deposit guarantee fund to finance the rescue of the entities that were intervened last year. Added to this has been a decrease in income as a market maker and an increase in provisions for late payment, as explained by the entity.
“We delivered strong results in the fourth quarter and for the year as a whole, as all our businesses achieved strong organic growth, with record customer activity and digital engagement,” CEO Brian Moynihan said in a statement. This activity translated into good loan demand and deposit growth in the quarter, as well as a net profit of $26.5 billion for the full year. [antes de descontar la retribución a preferentes y otras partidas para llegar al resultado neto consolidado atribuible antes citado]. Our spending discipline allowed us to continue investing in growth initiatives. “Strong capital and liquidity levels position us well to continue delivering responsible growth in 2024,” he added.
Wells Fargo, for its part, increased its profit by 40%, to $19,142 million, thanks to a strong increase in interest income, which went from $44,950 to $52,375 million. That boosts overall revenues by 11%, to $82,597 million. according to the accounts published this Friday.
In its case, the bank has been able to absorb a $1.9 billion bill from the Federal Deposit Insurance Corporation (FDIC) to finance the bank rescue. In the fourth quarter, Wells Fargo's profit grew 9%, to $3,446 million.
“While the improvement in our results in 2023 benefited from the economic and rising interest rates, our continued focus on efficiency and strong credit discipline also contributed significantly,” commented in a statement Charlie Scharf, CEO of Wells Fargo. “Looking ahead, our business results remain sensitive to interest rates and the health of the US economy, but we are confident that the actions we are taking will drive stronger returns throughout the cycle. We closely follow the evolution of credit and, although we observe a slight deterioration, it remains consistent with our expectations. Our capital position remains strong and returning excess capital to shareholders remains a priority,” Scharf continued.
Citi, which has taken advantage of the end of the year to clean up its balance sheet due to its exposure to Argentina and Russia, among other factors, will also publish results throughout this Friday, while to know the accounts of Goldman Sachs and Morgan Stanley we will still have to wait until Tuesday.
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