NEW YORK -- Profits at JPMorgan Chase and Bank of America surged last year, the banks said Friday as the industry enjoyed a stock market rally that accelerated after the presidential election.
The industry is entering what analysts say could be a period of renewed growth as rising interest rates make it easier for banks to earn a profit and President-elect Donald Trump has said he would roll back regulations put in place after the financial crisis that have hampered industry profits. Increased trading levels across U.S. markets, which are near record levels, has also helped the industry.
JPMorgan and Bank of America, two of the largest banks in the world, both beat analysts' profit expectations and gave positive forecasts for the future.
"The optimism for positive change here at Bank of America and among our customers is palpable," Bank of America Chief Executive Officer Brian Moynihan said on a conference call with analysts. The new administration has raised the prospect of a corporate tax overhaul and regulatory changes, Moynihan said. "We'll have to see how these topics play out but that we are optimistic," he said.
The North Carolina bank reported its largest yearly profit, nearly $18 billion, or $1.50 a share, since the financial crisis. During the fourth quarter, net income jumped 43 percent to $4.7 billion, or 40 cents a share, compared with the same period in 2015 as Bank of America continued to cut costs. Revenue increased about 2 percent during the quarter to $20 billion.
At JPMorgan, CEO Jamie Dimon also expressed optimism. "The U.S. economy may be building momentum," he said in a statement. "Looking ahead there is opportunity for good, rational and thoughtful policy decisions to be implemented, which would spur growth."
In a conference call, Dimon said he is "comforted" that Trump has picked "professionals" for his administration, including Treasury Department nominee Steven Mnuchin. "Give him some time," said Dimon, who is serving on Trump's Strategic and Policy Forum.
JPMorgan's profits jumped 24 percent during the fourth quarter to $6.73 billion, or $1.71 a share, compared with a profit of $5.43 billion, or $1.32 a share, during the same period a year ago. For the entire year, profits were up about 1 percent to $24.7 billion, or $6.18 a share, while revenue reached more than $95 billion.
"Our results this quarter were a strong end to another record year," Dimon said in a statement.
Meanwhile, Wells Fargo lagged behind its competitors as it continues to recover from a sales scandal that put it in the cross hairs of lawmakers and sparked several federal investigations. In September, the bank admitted that thousands of low-level employees had set up sham accounts to meet sales quotas. In some cases, the customers were charged various fees for accounts they did not know existed.
The bank has apologized repeatedly and refunded more than $3 million to customers for fees they were charged on accounts they didn't ask for. Earlier this week, the company announced a new pay plan that replaces the sales goals.
But the scandal appears to still be weighing on its bottom line. Wells Fargo opened 40 percent fewer checking accounts and 43 percent fewer credit cards in December compared with the same period in 2015.
It reported a 4 percent dip in profits last year, $21.9 billion, or $3.99 a share, compared with $22.9 billion, or $4.12 a share, in 2015. Revenue increased about 3 percent to $88.3 billion. During the fourth quarter, net income dipped to $5.3 billion, or 96 cents a share, at the San Francisco bank compared with $5.6 billion, or $1.03 a share, during the same period in 2015. Revenue was unchanged during the quarter at about $21 billion.
"We continued to make progress in the fourth quarter in rebuilding the trust of our customers, team members and other key stakeholders," CEO Tim Sloan said in a statement. "While we have more work to do, I am proud of the effort of our entire team to make things right for our customers and team members and to continue building a better Wells Fargo for the future."
Business on 01/14/2017