NEW YORK: Large US banks reported Friday a mixed fourth quarter to conclude a turbulent year, but expressed optimism about 2021 thanks to the coronavirus vaccine and additional fiscal stimulus.
JPMorgan Chase, Citigroup and Wells Fargo all modestly lowered their reserves set aside earlier in the pandemic when coronavirus shutdowns prompted the banks to establish huge provisions in case of a wave of defaults due to a much sharper economic downturn.
The banks are still keeping billions of dollars in provisions for bad loans in case the economy takes another turn for the worse.
But executives are generally hopeful about the new year as coronavirus vaccines become more widely deployed and as President-elect Joe Biden advances a fiscal package expected to keep households flush with enough funds to pay their bills.
“You have a cloudy next two quarters of mixed economic information and you have almost 4,000 people dying today,” said JPMorgan Chase Chief Executive Jamie Dimon.
But “we’ve got the vaccine coming, we’ve got fiscal stimulus and people have saved a lot of money,” Dimon said on a conference call with reporters. “You’ve got a lot of pent-up demand and hopefully optimism by the fact that we’re getting through this mess.”
Citigroup Chief Financial Officer Mark Mason said conditions have improved even since the end of the fourth quarter, with more vaccines advancing and clarity over the next US presidential administration.
“There are a lot of favorable indicators that ... make for a positive outlook,” he said. “And hopefully a continued stable recovery.”
JPMorgan reported record quarterly profits of $12.1 billion, up 42.4 percent from the year-ago levels, while revenues rose 3.3 percent to 29.2 billion.
The profits included $1.9 billion in credit benefits, reflecting that the bank now expects fewer loan defaults compared with last year. But the bank still has $30 billion in reserves, which “continue to reflect significant near-term economic uncertainty and will allow us to withstand an economic environment far worse than the current base forecasts by most economists,” the bank said.
At Citigroup, earnings dipped seven percent to $4.6 billion on a 10 percent drop in revenues to $16.5 billion.
Results were pressured by a hit from lower Federal Reserve interest rates. Citi’s investment banking operations were mixed, due to lower merger and acquisitions advising revenues, offset by gains in market trading.
Wells Fargo reported that fourth-quarter profits edged up four percent to $3.0 billion, while revenues fell 10 percent to 17.9 billion.
The results included one-time costs of $781 million in restructuring expenses as it aims to gain momentum following a series of scandals and missteps.
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