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Business Times
7 days ago
- Business
- Business Times
US banks JPMorgan and Citigroup see lower recession risk despite tariff fog
[NEW YORK] Large US banks reported results that topped estimates on Tuesday as executives pointed to American economic resilience and said businesses were adapting to tariff uncertainty. Executives from JPMorgan Chase and Citigroup described US consumers as still fundamentally in good shape despite continued risks to the outlook. Both banks now see a lower risk of recession compared with April, when they last reported results. Top officials with the banks also characterised clients as less frazzled by President Donald Trump constantly changing trade policy compared with April, when financial markets were in turmoil. In the last week alone, Trump has threatened deep tariffs on some two dozen countries and spoken of new levies on copper and pharmaceuticals - announcements that many market watchers remain skeptical will be enacted in light of previous tariff pivots by the US president. 'The corporate community ... has sort of accepted that they just need to navigate through this and are kind of getting on with it,' JPMorgan chief financial officer Jeremy Barnum told reporters on a conference call. Later on a call with Wall Street analysts, Barnum described US consumer spending as still fairly robust. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'We continue to struggle to see signs of weakness,' Barnum said. 'The consumer basically seems to be fine.' Citigroup CFO Mark Mason said businesses had acquired more 'comfort with the uncertainty' compared to earlier in the year. 'The general sentiment has improved a bit if you look at things like the prospect of a recession, that has fallen significantly from what it was earlier in the second quarter,' Mason told reporters on a conference call. Soft landing eyed At JPMorgan, second-quarter profits came in at US$15 billion, down 17 per cent from the year-ago period when results were boosted by a one-time equity item. But that translated into US$4.96 per share, compared with US$4.49 projected by analysts behind higher profits in operating divisions. Revenues were US$44.9 billion, down 11 per cent from the year-ago period. In the most recent quarter, JPMorgan benefited from higher asset management fees, as well as increased trading revenues amid financial market volatility during stretches of the quarter. These aspects helped offset higher technology expenses. JPMorgan chief executive Jamie Dimon said investment banking activity had started slowly in the quarter, 'but gained momentum as market sentiment improved,' resulting in a seven percent gain. Dimon described the tax cut extensions Trump recently signed into law as 'positive' for the economic outlook, along with 'potential deregulation,' according to a statement. 'However, significant risks persist - including from tariffs and trade uncertainty, worsening geopolitical conditions, high fiscal deficits and elevated asset prices,' Dimon said. 'As always, we hope for the best but prepare the firm for a wide range of scenarios.' During a conference call with reporters, Dimon said the cautious comments related to possible outcomes and were not a prediction. 'The world is kind of pricing in a soft landing,' he said. 'We've been in that soft landing and it may very well continue.' At Citi, profits came in at US$4.0 billion, up 25 per cent from the year-ago level, while revenues rose eight percent to US$21.7 billion. Profits were boosted by higher markets revenue and investment banking fees, among other areas. Mason described the macroeconomic outlook as improved from April, which points to the 'underlying strength' of the US private sector and capital markets. 'We do anticipate further consumer cooling the second half (of 2025) as tariff effects play through,' Mason said, while adding that 'the global economic performance has been quite resilient.' Shares of JPMorgan were decline 0.8 per cent, while Citigroup rose 3.6 per cent. AFP
Yahoo
15-07-2025
- Business
- Yahoo
Big banks say the US consumer 'basically seems to be fine'
After a hectic first half of the year, second quarter results from some of the country's biggest banks showed Tuesday that the US consumer largely managed to hold steady as market volatility and an uncertain wave of tariff-related sticker shock rippled through American households. JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC), three of the country's four largest banks, all reported results early Tuesday that showed increases in their consumer banking divisions' revenue from higher loan balances on their customers' cards. But even with customers holding more debt on their credit cards, the rate of 90-day-plus delinquencies — or missed payments — was roughly flat year over year across all three banks. "The consumer basically seems to be fine," JPMorgan Chase CFO Jeremy Barnum said on the company's earnings call on Tuesday. Net charge-offs, or the amount of loans that a bank writes off as uncollectible, were up by only 1% across the consumer division of JPMorgan and roughly flat at Citi. Wells Fargo customers notched the best performance out of the three, seeing a drop of 10% in written-off loans. Citi traded up more than 3% following its earnings report, while JPMorgan lost 0.4%. Wells Fargo lost more than 5% after the bank missed analyst estimates and lowered its full-year guidance for net interest income. Some of the resiliency reflected in these results may be skewed by income levels across consumer banking customers. Just last summer, leadership of all three banks warned that the financial situations of their lower-income customers were increasingly stressed, which Barnum acknowledged on JPMorgan's call. "If you look at indicators of stress, not surprisingly, you see a little bit more stress in the lower income bands and you're seeing the higher income bands," Barnum said. "But that's always true." "As we've said before, fundamentally, while there are nuances around the edges, consumer credit is primarily about labor markets," Barnum added. "And in a world with [a] 4.1% unemployment rate, it's just going to be hard, especially in our portfolio to see a lot of weakness." Read more: How to protect your money during turmoil, stock market volatility "As we look ahead, what we see regarding the health of our clients and customers has not changed," Wells Fargo CEO Charles Scharf said on the bank's Tuesday earnings call. "Consumers and businesses remain strong as unemployment remains low and inflation remains in check." Inflation data out Tuesday morning showed consumer prices rose at a faster rate in June, though increases remain more moderate than what consumers faced in the years after the pandemic. And with stocks near record highs, banks are leaning into the higher-end of their consumer base and broadening premium offerings. In June, JPMorgan announced that consumers of the bank's premier travel card, the Chase Sapphire Reserve card, would begin paying an increased yearly fee of $795 — a nearly 45% increase from the previous $550 fee — amid an overhaul of the card's benefits offerings. Read more: See the winning credit cards in the 2025 Yahoo Finance Awards Citi announced during its Q2 earnings call on Tuesday that the bank would be launching its own "Strata Elite" premium credit card targeted toward the same affluent consumers JPMorgan is chasing with Sapphire Reserve. Details around annual fees and benefits were not clarified in the presentation. JPMorgan is also working on opening 14 new offices in locations such as Palm Beach, Florida, and Madison Avenue in New York City for customers with balances of $750,000 and up, according to reporting by Business Insider. The Street will get another look at the state of consumer finances on Wednesday, when Bank of America (BAC), Goldman Sachs (GS), and PNC Financial Services Group (PNC) all open their books. Click here for in-depth analysis of the latest stock market news and events moving stock prices Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Finextra
21-05-2025
- Business
- Finextra
Fewer than 1 in 4 banks ready for AI era
A vast majority of banks are unprepared for the advent of artificial intelligence, according to recently published research 0 This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. A report from Boston Consulting Group (BCG) found that almost all banks have invested in AI technology, yet less than 1 in 4 have progressed from pilots and proof of concepts to fully implement the technology into their daily operations. "The leap from predictive analytics to generative AI—and now to fully autonomous, agentic systems—is here," states the report. "AI is no longer a fringe experiment; it's the engine of next-generation banking. Customer interactions, loan approvals, fraud detection, even compliance monitoring: all are ripe for reinvention." Yet a recent BCG survey finds that only 25% of institutions have "woven these capabilities into their strategic playbook" states the report. "The other 75% remain stuck in siloed pilots and proofs of concept, risking irrelevance as digital-first competitors accelerate ahead. Most banks are deploying AI toward basic activities—not those that lead to transformation." According to BCG, banks must move beyond pilots to redefine strategy, technology and governance - or "risk losing control of the financial landscape to faster movers". "Early movers will set the pace—and the terms—of AI competition," states the report. "Lagging banks will find themselves racing to catch up under conditions they didn't choose." The publication of the report comes at an important time for AI in financial services on both sides of the Atlantic. The EU's AI Act came into force in August 2024. Meanwhile, the US largest bank, JP Morgan Chase, recently suggested it intends to ramp up its use of AI to increase efficiency while also calling for a slowdown in hiring. The bank's CFO, Jeremy Barnum, told investors at a meeting in New York that recruitment is set to slow following the appointment of 60,000 people over the last five years, equivalent to a 23% increase in head count. 'We're asking people to resist head count growth where possible and increase their focus on efficiency,' said Barnum, in comments reported by Business Insider.
Miami Herald
20-05-2025
- Business
- Miami Herald
JPMorgan Chase CFO issues stern warning to employees
Over the past few months, JPMorgan Chase (JPM) has developed a tense relationship with some of its employees after it decided to scale back remote work. In March, the company's new return-to-office mandate went into effect. This mandate requires employees to work in the office five days a week instead of three or four. Before the mandate was enacted, some employees protested the change by starting a petition on demanding that the company retain its hybrid work model. Don't miss the move: Subscribe to TheStreet's free daily newsletter In response to the petition, JPMorgan Chase CEO Jamie Dimon went on a foul-mouthed rant during a town hall meeting in February, stating that he doesn't care how many people signed the petition; the return-to-office mandate will not be adjusted. Related: Jamie Dimon claps back at return-to-office complaints, again Dimon later apologized in an interview with CNBC for cursing during the meeting, but doubled down on the company's return-to-office mandate. "I completely respect people that don't want to go to the office all five days a week," said Dimon. "That's your right. It's my right. It's a citizen's right. But they should respect that the company is going to decide what's good for the clients, the company, etc., not an individual. And so, I'm not being mean; they can get a job elsewhere." Image source:Now that the mandate is in full effect, JPMorgan Chase is warning employees to brace themselves for another significant change in the office. During JPMorgan Chase's annual Investor Day presentation, the company's CFO, Jeremy Barnum, said that managers have recently been instructed to wind down hiring, pushing them to work better with their current employee headcount, according to a recent report from Business Insider. "At the margin, we're asking people to resist head count growth where possible and increase their focus on efficiency," said Barnum. He said that less than $95 billion in annual spending will be used for hiring, and that the company will instead focus more on hiring employees in "high-certainty areas" such as bankers, branches, and advisors. Related: IRS has an alarming solution to a growing problem after layoffs Barnum also said that artificial intelligence will be used to boost productivity. "It's actually pretty amazing, and from what certain of my colleagues tell me who are actually trained professional computer scientists, it (AI) actually helps them quite a bit too with their efficiency," said Barnum. "It's not just the amateurs who are helped by these tools. It's amazing stuff, and we have high hopes for the efficiency gain." Marianne Lake, JPMorgan Chase CEO of consumer and community banking, said during the presentation that about 10% of employees in the company's operations division, which is focused on tackling fraud, statement and payment processing, and account services, will be laid off. She also highlighted that AI will allow the department to operate with fewer employees and "deliver more." The last time JPMorgan Chase reportedly laid off a significant amount of employees was in February, when it let go a little less than 1,000 workers. JPMorgan Chase isn't the only company that has recently bet big on AI. The IRS currently has its sights set on firing between 60,000 and 70,000 workers this year. During a House Appropriations Committee hearing on May 6, U.S. Treasury Secretary Scott Bessent said that the IRS will replace fired workers with AI, which will boost its ability to collect tax revenue. More Labor: Amazon CEO gives hard-nosed message to employeesIBM gives employees a rude awakening with harsh new policySnapchat CEO teaches new employees a strict lesson "I believe through smarter IT, through this AI boom that we can use that to enhance collections, and I would expect that collections would continue to be very robust as they were this year," said Bessent during the hearing. Tech giant IBM has also increased its reliance on AI. Its CEO, Arvind Krishna, said during a recent interview with the Wall Street Journal that the company has heavily invested in AI, which has replaced hundreds of HR workers but has resulted in more hiring at the company. "While we have done a huge amount of work inside IBM on leveraging AI and automation on certain enterprise workflows, our total employment has actually gone up, because what it does is it gives you more investment to put into other areas," said Krishna. As more companies rely on AI to boost productivity, U.S. workers are suspicious of the technology. According to a recent survey from YouGov, more than one-third of U.S. workers are worried that AI will result in job loss or fewer work hours. Also, 56% of workers in the survey believe that AI will decrease the number of job opportunities, and 55% think that their work hours will be reduced due to the technology. Related: Veteran fund manager unveils eye-popping S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
20-05-2025
- Business
- Yahoo
JPMorgan Big Move: $18 Billion Tech Spend Signals AI Push for 2025
JPMorgan Chase (NYSE:JPM) said it plans to invest approximately $18 billion in technology next year, with a focus on AI to drive productivity and support volume growth, according to a Monday investor presentation. The bank reaffirmed its full-year 2025 guidance for total expenses of around $95 billion. It also maintained its net interest income forecast at roughly $90 billion, excluding Markets, and $94.5 billion on a firmwide basis. Chief Financial Officer Jeremy Barnum noted that while headcount has grown by about 4% annually over the past five years, the company sees room to increase operational efficiency. We continue to invest through the cycle, while simultaneously focusing on extracting efficiencies, Barnum said in the presentation slides. Despite the focus on trimming inefficiencies, JPMorgan said it remains committed to resourcing key areas such as bankers, advisors, and branches. The firm reported Q1 2025 credit reserves of $16.9 billion in its consumer division and $10.5 billion across wholesale operations. Its common equity tier 1 (CET1) capital stood at $280 billion, including $57 billion above regulatory requirements. Investor Day presentations began Monday morning and featured updates from all major business segments. This article first appeared on GuruFocus.
