(AOF) – The results season begins on an unfavorable note for the American banking sector. Strongest decline in the Dow Jones, JPMorgan lost 5.36% to $184.96, penalized due to disappointing interest income. For its part, Citigroup lost 0.75% to $65.26 after revealing sharply reduced profits due to restructuring costs. Wells Fargo (-0.25% to $56.55) is doing a little better on the stock market even if its quarterly results fell in the wake of its interest income.
In the first quarter, JPMorgan recorded a 6% increase in net profit to $13.42 billion, or $4.44 per share. Earnings per share beat consensus at $4.17. JPMorgan recorded in its accounts a charge of $725 million, which is intended to participate in the bailout of the American agency guaranteeing bank deposits in the United States. The FDIC had to intervene after the bankruptcy of several regional banks in 2023.
Net banking income increased 9% to $41.93 billion, supported by an 11% increase in interest income to $23.08 billion. Wall Street was, however, slightly more optimistic for the latter and targeted $23.13 billion. The market was targeting $41.69 billion in revenue at the group level.
JPMorgan forecasts $89 billion in interest income, excluding brokerage activities, this year compared to $88 billion previously.
Citi: restructuring weighs on profits
Over the first three months of 2024, net profit fell 27% to $3.37 billion, or $1.58 per share. Citi also recorded in its accounts a charge intended to participate in the FDIC bailout. It amounted to $251 million.
The bank’s operating expenses increased by 7% to $14.195 billion, including $225 million in restructuring charges and $258 million related to its cost reduction efforts. Citigroup has cut 7,000 positions, which should save it $1.5 billion per year in the medium term.
At the same time, revenue fell 2% to $21.10 billion. They are anticipated to be between $80 and $81 billion in 2024.
“Last month marked the end of the organizational simplification we announced in September. The result is a more efficient and simpler management structure that fully aligns with and facilitates our strategy. It will also help us implement “works our transformation” commented Executive Director, Jane Fraser.
Wells Fargo reported declining profits between January and March due to lower interest income. Over this period, net profit stood at $4.62 billion, or $1.20 per share, compared with $4.99 billion, or $1.23 per share, a year earlier. The consensus was $1.26 per share. Revenue rose 0.65% to $20.863 billion. Interest income fell 8% to $12.23 billion.
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