- JPMorgan and Goldman Sachs also had a blowout quarter in Wall Street trading and due to deals connected to companies going public.
NEW YORK: Profits soared in the first quarter at three US banking giants thanks to an improving macroeconomic backdrop that has reduced the need to set aside funds for bad loans.
JPMorgan Chase, Goldman Sachs and Wells Fargo each notched earnings at least four times higher than the same three-month period of 2020, boosted in part by releasing funds that had been held in reserve in anticipation of a big pandemic downturn.
JPMorgan and Goldman Sachs also had a blowout quarter in Wall Street trading and due to deals connected to companies going public.
Bank CEOs offered a heady outlook on the expected boom-like conditions in the coming months, but cautioned that there were challenges ahead as pent-up demand for goods, services and experiences drives activity.
"We think we're going to have very robust economic growth in the second half of 2021 and into 2022," Goldman Sachs Chief Executive David Solomon said on a conference call with analysts.
The downside of that scenario is the chance for a big jump in inflation that prompts aggressive moves by the Federal Reserve to tighten monetary supply, Solomon said.
That outcome is "not obvious in the near-term," Solomon said. "But it's a risk issue markets will have to continue to watch."