Last Friday evening Beijing time, with the release of mixed first quarter reports by global banking leader JPMorgan Chase, a new round of US stock earnings season officially kicked off amidst turbulence and uncertainty. In addition, heavyweight financial institutions such as Wells Fargo, Citigroup, and BlackRock have successively announced their quarterly performance.
JPMorgan Chase's Q1 2024 financial report showed that although its interest income did not meet market expectations, its net profit for the first quarter was $13.4 billion, a year-on-year increase of 6.3%. The operating revenue in the first quarter was 41.9 billion US dollars, a year-on-year increase of 9.3%. It is worth mentioning that after acquiring bankrupt First Republic Bank in May last year, JPMorgan Chase also added billions of dollars in loans to its balance sheet, further increasing interest income.
The first quarter report shows that Xiaomo's net interest income in the first quarter was $23.08 billion, although it increased by 11% year-on-year, it decreased by 4% month on month while the benchmark interest rate remained unchanged. JPMorgan Chase CEO Jamie Damon said in his financial report, "Net interest income decreased by 4% month on month this quarter, as expected. Looking ahead, we expect net interest income and credit costs to continue to normalize."
In terms of annual financial guidance, the company expects a net interest income of approximately $90 billion for the year, which is consistent with the previous quarter's annual report, and slightly increases the net interest income guidance excluding market business to $89 billion. At the same time, the expected adjusted expenses will be increased to $91 billion, slightly by $1 billion.
Despite the increasing optimism about an economic soft landing in the past few months, Jamie Damon still maintains a conservative and cautious attitude. "Many economic indicators continue to improve. However, looking ahead, we remain vigilant about some significant uncertainties," he said in a statement earlier.
Damon emphasized the current "unsettling" global situation, including "terrible wars and violence", which not only have a profound impact on human society, but also pose unpredictable risks to JPMorgan's business and overall economic environment. His viewpoint reflects the widespread concern of the financial community about the current international situation.
Peter Sandler analyst Scott Severs wrote in a report to clients that JPMorgan's guidance on net interest income "makes us feel extremely conservative.". "This conservative attitude will disappoint investors and may put pressure on the stock."
In other data, JPMorgan Chase's credit loss reserve for the first quarter was $1.88 billion, far below analysts' expectations of $2.7 billion, a 17% decrease from a year ago. Overall trading revenue decreased by 5% compared to the same period last year, but fixed income and stock performance exceeded analyst expectations by over $100 million, reaching $5.3 billion and $2.7 billion respectively.
After the financial report was released, JPMorgan Chase's stock price plummeted, falling more than 6% as of the close of the day.
According to the first quarter financial report of Fuguo Bank, the operating revenue in the first quarter was $20.9 billion, a year-on-year increase of 0.65%; Net profit was 4.62 billion US dollars, a decrease of 7.5% year-on-year. Market analysts believe that the reason for the decrease in net profit is that the cost of paying deposits to customers has become higher, and the demand for borrowers has decreased.
According to the financial report, Wells Fargo's net interest income for the first three months of this year was $12.2 billion, a year-on-year decrease of 8.3%, slightly lower than analysts' expectations of $12.3 billion. However, due to the increase in investment consulting fees and transaction commissions, the overall revenue is still higher than expected.
In terms of other data, unlike Wells Fargo and JPMorgan Chase, Citigroup's net interest income totaled $13.5 billion, exceeding Wall Street's expectations, as consumer trust in Citigroup's credit cards increased. Citigroup's net profit for the first quarter totaled $3.4 billion, exceeding the forecast of analysts in a Bloomberg survey. The first quarter revenue was $21.1 billion, also exceeding Wall Street's average expectation of $20.4 billion.
The market generally expects that the Federal Reserve will take some time to cut interest rates, which has boosted profits in key business areas, and more and more companies are choosing to hire Citigroup bankers to sell bonds. At the same time, consumer spending and balance on credit cards have also increased. Investors have also been closely monitoring Citigroup's profits as CEO Jane Fraser is undergoing a company wide restructuring, including cutting 20000 positions.
In addition, according to BlackRock's Q1 2024 financial report, BlackRock's managed assets reached a record high of $10.5 trillion. At the same time, due to the global stock market rebound, BlackRock's investment consulting and management business expenses were pushed up, with a net profit of $1.573 billion in the first quarter, a 36% increase from the same period last year. However, the total net inflow decreased from $110 billion in the same period last year to $57 billion. Due to customers being wait-and-see and waiting for interest rate cuts to begin before investing in risky assets, the inflow of funds continues to be weak.
The CEO of BlackRock Group stated that it is difficult for US inflation to fall back to 2% and expects the Federal Reserve to cut interest rates at most twice this year, but even so, it will still be difficult to curb inflation. Market analysts predict that once the Federal Reserve implements interest rate cuts by the end of the year, the flow of funds in the asset management industry will accelerate again, as this will stimulate cash that is currently in a wait-and-see state to shift towards risky assets.