Share markets in the United States witnessed strong move upwards after several days of sharp declines as three of its largest banks reported strong profits. While the Industrial Average of Dow Jones and S&P closed up by more than 1 percent, Nasdaq leapt upwards by 2.3 percent. This increase echoes a rise in global share markets despite rising concerns about increasing interest rates and trade war. The gains by banks like JP Morgan Chase, Citigroup and Wells Fargo was possible as high interest rates help banks improve profits as customer borrowing costs increase though it could become risky if customers stop borrowing.
These banks however stated that they have witnessed slowdown in new home loans including regional bank PNC Financial Services Group. But JP Morgan CFO Marianne Lake that the bank has witnessed strong lending growth despite the high-interest rates so it would not say that this development was problematic. JP Morgan Chase’s Jamie Dimon said that though economic data in the United States was relatively healthy, external geopolitical issues like Brexit, trade tensions and changing monetary policies of other nations could pose risks to business growth.
These banks are the first firms to provide details about their financial growth to investors after the earnings season gets under way. JP Morgan’s quarterly profit increased by 24 percent every year to $ 8.38 billion, due to strong growth of its retail banking division. The bank’s revenues grew by 5 percent to $27.8 billion. The quarterly profits of Wells Fargo grew by 32 percent every year to $6 billion as the bank took firm steps to cut operating costs. The profits of Citigroup during this period went up by $ 4.6 billion due to growth by 12 percent since third quarter of 2017. The shares of JP Morgan rose during early morning trade after this announcement though it drifted down to 1 percent while Wells Fargo shares increased by 1.3 percent while Citigroup’s grew at 2 percent.