JPMorgan Chase & Co. Chief Executive Jamie Dimon warned that inflation and interest rates could remain higher for longer than expected, despite the three largest U.S. banks reporting strong quarterly earnings.
“While there has been some progress in reducing inflation, there are still multiple drivers of inflation, including large budget deficits, infrastructure needs, trade restructuring and global rearmament,” Dimon said. “As a result, inflation and interest rates may remain higher than markets expect.”
Inflation slowed to its first slowdown in four years in June, a welcome change that many expect will prompt Federal Reserve Chairman Jerome Powell, who has signaled interest rate cuts, to cut interest rates sooner.
The Labor Department said the consumer price index, which measures the cost of U.S. goods and services, fell 0.1% from the previous month. It was up 3% from a year ago, but the slowest increase in three years since the pandemic caused markets to crash and inflation to spike.
Powell said Wednesday that the Fed will cut interest rates when the economy is ready. Next Presidential ElectionHe has previously said he wants more evidence that inflation is weakening before cutting rates.
Meanwhile, Dimon’s JPMorgan and the other two major U.S. banks reported better-than-expected second-quarter profits and revenues as activity picked up on Wall Street.
JPMorgan’s adjusted earnings per share were $4.26. LSEG analysts’ forecasts $4.19.
Revenue rose 20% to $50.99 billion, beating analysts’ expectations of $49.87 billion, likely helped by the bank earning $2.3 billion in investment banking fees.
Despite the better-than-expected quarterly results, Dimon said the U.S.’s largest bank remains conscious of socio-economic risks.
“The geopolitical situation remains complex and potentially the most dangerous since World War II, with the outcome and impact on the global economy remaining unclear,” Dimon said.
JPMorgan shares were down 1% in early trading on Friday. The stock has risen nearly 20% so far this year.
Wells Fargo, the fourth-largest U.S. bank, Earnings and sales beat expectationsBut the company’s shares were down nearly 7% in early trading on Friday. Wells Fargo shares have risen nearly 14% so far this year.
“Growth in fee revenue continues to offset the expected decline in net interest revenue,” Chief Executive Charlie Scharf said in a statement.
Adjusted earnings per share were $1.33, beating the $1.29 expected by LSEG analysts.
Revenue was $20.69 billion, beating analyst estimates of $20.29 billion.
Citigroup, the third largest bank in the United States, followed suit. Profit and Revenue Expectations.
Adjusted earnings per share were $1.52, beating LSEG analysts’ expectations of $1.39.
Citigroup’s revenue was $20.14 billion, beating the $20.07 billion expected and up 4% from last year.
“Our performance demonstrates the progress we are making in executing our strategy and the benefits of our diversified business model,” said CEO Jane Fraser.
Equity trading revenues jumped 37 percent to $1.5 billion, while investment banking revenues soared 60 percent to $853 million.
The better-than-expected results came shortly after U.S. regulators fined Citigroup $136 million for failing to fix data issues identified in 2020.
Citi’s shares were down 2% in early trading on Friday. The company’s shares have risen 20% so far this year.
Rivals Goldman Sachs, Bank of America and Morgan Stanley are due to report second-quarter results next week.
