American Banks, JPMorgan Chase, Bank of America, Goldman Sachs, Wells Fargo, Citigroup: A Little Borrowed

Posted on Jul 14, 2021, 5:58 PM

The joke is as old as the banking profession: it is about lending to those who can prove they don’t need it. It just turns out that Uncle Sam’s establishments are no longer doing their job! Although they heat up their credit cards for their leisure, Americans apparently have as much difficulty returning to the office – or resuming a job – as they do taking credit.

Despite the end of government checks, deposits continued to grow in the second quarter (+ 23% at number 1 JPMorgan Chase), while consumer loans continue to decline (-12% at Bank of America). The net interest margins of the five of the American leaders, all below expectations, therefore seemed a bit borrowed.

The disappointing control of costs can be explained in large part by the surge in income in investment banking, which has earned the entire sector bountiful net profits. The M&A advisor laughs where trading cries – the exact reverse mirror of last year -, and returns to the Caesar of Wall Street, i.e. Goldman Sachs, what belongs to it, namely the profitability of equity podium (24%).

The other banks are taking care of this strange pandemic convalescence by resuming the huge provisions made as a precaution last year, ie around 19 billion dollars in the first half of the year, well above expectations.

But when this crutch is a little too visible, as at Bank of America, the Stock Exchange does not hesitate to hit the plaster (-2.2% Wednesday, the only one to decline).