JPMorgan Chase reports record profits, while Wells Fargo eyes cost cuts
New York (AFP)
JPMorgan Chase posted record fourth-quarter profits Tuesday as it eyes growth in China, while Wells Fargo reported another earnings stumble and signaled cost-cutting ahead.
JPMorgan cited continued strength of the US consumer and better-than-expected trading results amid improved US-China trade relations as key attributes in capping a year of record revenue of net income.
Chief Executive Jamie Dimon said despite the "continued high level of complex geopolitical issues" facing the global economy, the "resolution of some trade issues helped support client and market activity towards the end of the year."
Dimon described the holiday season as "robust," as reflected in a 10 percent jump in credit card sales volumes.
Dimon highlighted China as a key growth market, noting that last year it became the first US bank to be approved for a majority-owned securities business in the country.
Net income at JPMorgan surged 20.6 percent to $8.5 billion for the three months ending December 31, kicking off the corporate earnings season with a strong performance.
Revenues rose 9.0 percent to $29.2 billion.
Citigroup also reported better-than-expected fourth-quarter profits of $5.0 billion, up 15 percent from the year-ago period.
Revenues rose 7.3 percent to $18.4 billion.
It was a much different story at Wells Fargo, where newly-installed Chief Executive Charlie Scharf has been mapping out a turnaround strategy since joining the struggling bank in October.
The company, a giant in US mortgage lending, has been on the back foot since late 2016 following revelations of a fake accounts scandal, one of the regulatory problems that prompted the Federal Reserve to impose a lending cap on the bank.
"During my first three months at Wells Fargo, my primary focus has been on advancing our required regulatory work with a different sense of urgency and resolve, while beginning to develop a path to improve our financial results," Scharf said in a statement.
"Wells Fargo plays an important role for our country and we know that ultimately our actions and results will dictate when that trust is fully regained."
Scharf said he identified "clear" opportunities to improve performance and that "our cost structure is too high."
There are "many areas where we will be able to increase our rate of growth," Scharf said.
"While it is too early to put time frames around these goals, we will be diligent in pursuing them and I am confident the opportunities are meaningful."
Net income at Wells Fargo sank 55.4 percent to $2.5 billion, dragged lower by $1.5 billion in litigation costs, some related to the fake accounts scandal.
Revenues dropped 5.2 percent to $19.9 billion.
JPMorgan's share price rose 1.0 percent to $138.57 in pre-market trading, while Wells Fargo dropped 3.1 percent to $50.49. Citigroup gained 0.9 percent to $81.40.
© 2020 AFP