Clients of giant US banks are increasingly nervous about growing trade tensions, but are not yet significantly curtailing business activity due to the uncertainty, banks said on Friday after reporting mixed earnings.
“There are unpredictable outcomes when you start skirmishes like this with multiple countries,” JPMorgan Chase & Co chief executive Jamie Dimon said.
“It’s a worry,” he told reporters in a conference call, but added: “I don’t know if I’d use the word ‘major’ yet.”
Citigroup Inc chief financial officer John Gerspach agreed with his counterparts that the concerns are not yet driving business decisions.
“When you get into this kind of rhetoric, it does impact sentiment,” he said. “It’s going to slow down decisionmaking in some cases, but that hasn’t translated yet into anything we’ve seen.”
Gerspach said that Citigroup has seen an uptick in activity within Asia that could pick up further if the US-China clash worsens.
The company has hired additional staff for China desks in India and South Korea, he said.
The comments came as the two major US banks reported earnings that easily topped analysts’ expectations, in contrast to slumping Wells Fargo & Co, which badly underperformed forecasts.
The banks are among the first major companies to report results in what is expected to be a strong second-quarter earnings season thanks to US tax cuts and a humming US economy.
However, a series of trade battles launched by US President Donald Trump against key trading partners, including China and the EU, have clouded the overall business outlook.
Another worry particular to bank stocks is whether the benefits from higher US Federal Reserve interest rates are ebbing.
Higher interest rates boost bank profits by allowing them to charge more for loans.
However, as rates continue to rise, banks must also pay more to depositors.
JPMorgan, the US’ biggest bank by assets, reported an 18.3 percent surge in net income in the second quarter from the same period last year to US$8.3 billion. Revenues came in at US$28.4 billion, up 6.5 percent.
Highlights included increases in net interest income following two Fed rate hikes this year and a rise in overall loans compared with the same period last year, a sign of strengthening economic conditions.
Citigroup’s profits jumped 16 percent in the second quarter to US$4.5 billion, due to overall loan growth and lower tax payments. Both of the group’s main divisions, global consumer banking and institutional client services, had higher profits.
Revenues came in at US$18.5 billion, up 2 percent from last year.
The big laggard was Wells Fargo, which still has not completely found its footing following a fake accounts scandal that surfaced in 2016, prompting numerous fines, government probes and lawsuits.
Net income fell 11.4 percent to US$5.2 billion, and there was a drop in overall deposits and loans. On the positive side, the company notched an increase in net interest income, indicating that it also benefited from higher interest rates.
“During the second quarter, we continued to transform Wells Fargo into a better, stronger company for our customers, team members, communities and shareholders,” Wells Fargo chief executive Tim Sloan said.
JPMorgan shares finished down 0.5 percent in New York on Friday, while Citigroup dropped 2.2 percent and Wells Fargo 1.2 percent.
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
Shin Kong Financial Holding Co (新光金控) yesterday said that its insurance unit would adjust its investment portfolio after being banned from buying new stocks a day earlier by the Financial Supervisory Commission (FSC). “We will research what we can do based on the commission’s specific instructions after we receive the regulator’s formal documents,” Shin Kong Financial spokesman Sunny Hsu (徐順鋆) told the Taipei Times by telephone. The commission on Tuesday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$941,722) for reckless investment, and demanded that the insurer reduce its overseas investment ratio from 43 percent to 39 percent. The fine would affect
Taipei Times: When do you think the hospitality industry can return to how it was before the COVID-19 pandemic? How does Formosa International Hotels Group (FIH, 晶華酒店集團) fare this quarter and beyond? FIH chairman Steve Pan (潘思亮): The virus outbreak will have a serious impact on business travel, driven mainly by meetings, incentive travel, conferences and exhibitions over the past three decades. For the past six months, many businesspeople have grown used to exchanging information on the Internet, where more people can participate. The trend might sustain for three to five years until people are vaccinated and it is safe to
EQUITIES TAIEX moves sharply higher The TAIEX moved sharply higher yesterday as buying focused on Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) after a strong showing by its American Depositary Receipts overnight. However, the gains were capped after the benchmark index breached 13,000 points and ran into technical hurdles, prompting investors to turn cautious, dealers said. At the end of the session, the TAIEX was up 131.11 points, or 1.02 percent, at 12,976.76. Turnover was NT$206.328 billion (US$7.04 billion), with foreign institutional investors buying a net NT$18.47 billion in shares, Taiwan Stock Exchange data showed. TSMC rose 2.92 percent to close at NT$458.