JPMorgan Chase, the biggest U.S. bank, reported third-quarter profits up 4 percent from the same period a year earlier. Goldman Sachs boasted a $3.62-billion profit for the period, beating analysts’ expectation of $2 billion. Citigroup posted a milder loss for the period than expected.
Goldman Sachs noted a 49-percent increase in profits from bond-trading and 10 percent in its stock-trading operation, thanks to heightened activity as institutional and wealthy private investors sought to cash in on rising markets.
JPMorgan Chase booked a 52-percent boost in investment banking revenue and a 21-percent jump in trading revenue.
Bank of America reported the second-most profitable quarter ever in its investment banking division.
The banks are doing well because federal supports have allowed their customers to weather the downturn in better condition than many expected.
That has allowed the banks to set aside less money during the quarter to cover loan losses than they did in the second quarter.
The laggard was Wells Fargo, which says it spent $1 billion helping customers revise payment plans to keep their loans from defaulting.
Despite the good news, the CEOs of both Citigroup and JPMorgan cautioned that the economy is still precarious, and they expect to report large losses in the future due to loans that will turn sour before the economy recovers.
The banks also expect unemployment to remain high – JPMorgan forecasts a 7-percent rate next year, Citigroup 6.4 – and that more customers will begin to default on their loans, although credit card defaults at both banks are at about 1 percent or less, a lower rate than last year.
If the economic recovery is brisk, JPMorgan Chase might need $10 billion less in loan-loss reserves than the $34 billion it has put aside, said CEO Jamie Dimon. If the recovery falters and enters a double-dip recession, the bank might need to add as much as $20 billion more to its reserve, he warned.
Consumers also are showing restraint.
Although Citigroup and JPMorgan saw credit card spending rise more than 20 percent in the third quarter compared to the second, JPMorgan’s volume was 8 percent below last year at the same time; Citigroup’s was off 10 percent.
Dimon told CBS that a “good, well-designed stimulus package will increase the chance we get” a stronger recovery, “but there’s so much uncertainty we’re not saying that’s definitive,”
TREND FORECAST: Mr. Dimon makes it clear. The only way there will be economic growth is to pump it up with a “good, well designed stimulus package [with most of the money going to the Banksters and Wall Street Gang].”
And, as we have forecast, there will be more than one. Should the Democrats win the White House and Congress, the “packages” will be extremely large.
