Source: Bloomberg
Author: katherine doherty
Although the high interest rate stirred the small banks over the horse last month, it brought unexpected gains to JP Morgan Chase, Citi Group, and Wells Fargo.
The three large American banks each found the way to profit from interest rate hikes.At the same time, the interest rate hikes led to the closure of Silicon Valley Bank in March, and the customers of the regional banks hurriedly transferred the unseen deposit to other security.
Morgan Chase announced that the deposit accident increased by 2%.As customers respond to interest rate changes, Citi Group's fixed income trading department performed well.The above three major banks stated that loan revenue increased year -on -year after the Fed's interest rate hike.
It is in stark contrast to the big bank's laughter. The regional bank deposit has a large outflow and the stock price has plummeted. Investors are worried that the increase in interest rates will erode the asset value of these banks.
However, the Wall Street financial report on Friday also brought a line of hope to the small bank. Although large banks began to pay higher deposit interest rates, they did not increase their competition.
Jeremy Barnum, chief financial officer of JP Morgan Chase, said at the conference call, "We see a lot of new account opening operations, a large amount of deposits flow, and a lot of money to go to the currency market fund."
The debate of "sticky"
Large banks said that the Federal Reserve ’s interest rate hike boosted their loan business income.
The net interest income of JP Morgan has soared by 49%in the first quarter, prompting the bank to raise this year's revenue expectations to $ 81 billion.January forecast was $ 73 billion.
Wells Fargo's revenue increased by 45%year -on -year, and Citi increased by 23%.Citi Group's fixed income traders accidentally promoted income by 4%, helping the bank to break the analysts' expectations for the decline in profits.
One of the current mysteries is how long the deposit flow trend may last.
Mark Mason, chief financial officer of Citi Group, said at a call meeting on Monday that the inflow of corporate funds caused by the turbulent financial industry's turbulence "is quite sticky".
Barnum of Morgan Chase said, "We have more real views on this issue. From a definition, these deposits are not very stable because they have just come in. Therefore, we think that a more wise and appropriate attitude is not to take them.As a particularly stable existence. "
At the same time, Larry Fink, CEO of Belle, said on Friday that depositors will continue to lose due to their concerns about regional banks.
"More and more deposits are flowing out, they flow into ETF and any form of cash and currency market funds," he said."This misalignment will create more and more opportunities for us."
