GET DAILY REPORT FREE
Signs of consumers slowing down their spending and falling behind on their bills weighed down shares of the big banks on Friday. JPMorgan Chase and Wells Fargo saw their adjusted profits fall, while Citigroup saw sluggish spending on its credit cards.
The major banks have benefitted from higher interest rates for the last two years, but those rates are causing consumers and businesses to slow down spending due to higher financing costs.
JPMorgan set aside $3.1 billion to cover potentially bad loans, up sharply from a year earlier, as the bank acknowledged that delinquencies were climbing among some Americans. Meanwhile Citigroup had to set aside more for potential losses as well.
“Higher-for-longer interest rates, persistently high housing prices, softening used vehicle values, and signs of a cooling labor market merit focused scrutiny from the banking sector,” wrote Chris Stanley, the banking industry practice lead at Moody’s, in a note to investors.
The nation’s biggest bank by assets on Friday posted a profit of $18.15 billion, up 25% from a year earlier. On a per share basis, JPMorgan earned $6.12 per share, which beat analysts’ estimates.
JPMorgan CEO Jamie Dimon repeated his warnings about heightened geopolitical risks and inflation in his statement to investors. Dimon, in several interviews, has said he believes that Americans and the bank should be preparing for inflation to remain higher than normal for longer than people are expecting.
