On October 14, 2022 local time, The four major U.S. banks—Morgan Stanley , JPMorgan Chase , Citibank , Welf Fargo —released the 2022 third-quarter financial report data on the same day. According to data, the net profits of the four major banks all fell sharply year-on-year in the third quarter, among which JPMorgan Chase, which had the smallest decline, also reached a 17% drop. Judging from the achievements of the four major banks, the national economy may have opened the curtain of recession!
Specifically, Morgan Stanley's revenue in a single quarter was US$12.99 billion, a year-on-year decrease of 12%, and net profit was US$2.63 billion, a year-on-year decrease of 29%; JPMorgan Chase's revenue in a single quarter was US$33.49 billion, a year-on-year increase of 10%, and net profit was US$9.74 billion, a year-on-year decrease of 17%; Citibank's revenue in a single quarter was US$18.51 billion, a year-on-year increase of 6%, and net profit was US$3.48 billion, a year-on-year decrease of 25%; Wells Fargo's revenue in a single quarter was US$19.51 billion, a year-on-year increase of 4%, and net profit was US$3.53 billion, a year-on-year decrease of 31%.
From the perspective of performance, Although the revenue of the four major banks increased by year-on-year (mainly relying on the rapid growth of net interest income, such as JPMorgan Chase's net interest income reached US$17.6 billion, a record high, a year-on-year increase of 34%; Wells Fargo's net interest income rose by 36% year-on-year), , affected by the impact of the epidemic and the continued spread of inflation (and the aggressive interest rate hike policy of the Federal Reserve ), the investment banking business of all banks has been seriously affected, which has dragged down the overall performance of the bank. data shows that the single-quarter investment bank revenue of Morgan Stanley, JPMorgan Chase and Citibank fell by 55%, 43% and 64% year-on-year respectively, and Wells Fargo has a smaller impact because its business is more inclined to the commercial banking sector.
As Fitch analysts have stated, the negative impact of high interest rates, high inflation and moderate recession in the U.S. will become increasingly important on bank asset quality and loan growth. Judging from the situation of the four major banks, not only did the related businesses be affected, but all major actions have withdrawn a large amount of risk provisions in the third quarter to deal with the potential economic recession risks. JPMorgan Chase and Wells Fargo's new bad debt provisions were as high as US$810 million and US$780 million, respectively, compared with the release of US$2.1 billion and US$1.4 billion in reserves respectively in the same period last year. This shift in risk tendency can be seen.
Overall, the long-term recession risk in the United States has suppressed the prospects of the banking industry, and the actual performance of the banking industry is reflecting the real market risk situation. The performance of leading institutions such as the four major banks is still like this, and the deterioration of the economic situation across the United States may become a high-probability event.
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