The big US banks reported earnings this week. The performance of JPMorgan, Citigroup, Goldman Sachs, Bank of America, Wells Fargo, and Morgan Stanley was driven mostly by whether they focus on trading or retail clients.
Banks with a trading focus - Morgan Stanley and Goldman Sachs - did well as clients bought and sold stocks in response to the pandemic and companies went public or raised fresh capital.
Banks with a retail focus - Citigroup and Bank of America - struggled due to historically low interest rates and low consumer spending.
Links to Reuters summaries:
- JPMorgan executives offer slightly brighter view on pandemic recession
- $19.4 billion in credit loss provisions so far this year -- 4x higher than last year. Added $611 million to loan loss reserves in Q3. CEO Dimon said "There's so much uncertainty. If better outcomes happen, we are over-reserved by $10 billion. If the double-dip happens, we would be under-reserved by $20 billion.
- "Low interest rates hurt JPMorgan's results in a predictable way", but they are ready to restart buybacks when regulators allow.
- Citigroup profit tumbles on low interest rates, loan demand
- Quarterly profit dropped by a third due to "record low interest rates and a slowdown in loan demand due to the pandemic-induced recession."
- Goldman's trading business returns to former glory during pandemic strength
- "Simply stunning results".. Goldman's "loan portfolio is small and of very high quality compared to those of other large bank holding companies. It has minimal exposure to credit cards and small business, which we see as the biggest COVID-19 risks. But it has upside leverage to more active capital markets."
- $2.8 billion in credit loss provisions so far this year. Added $278 million to loan loss reserves in Q3.
- Bank of America profit falls on pandemic woes
- Wells Fargo profit falls as pandemic hits growth
- Morgan Stanley profit crushes estimates on trading strength