Large US bank improves profit in 2021 but anticipates inflation effect

Nora Quintanilla New York, Jan 14 (EFE).- The great United States bank gave this Friday the starting signal for the results season, reporting more profits than the previous year and expecting the rises in interest rates, but anticipated problems related to high inflation. JPMorgan Chase, the main banking entity in the country, obtained a historical record of 48,334 million dollars, 66% more year-on-year, fueled in part by the reduction of reserves against defaults, while its income rose 1% accumulated, up to 121,649 millions. The bank’s chief executive, Jamie Dimon, whose comments on the economy often permeate Wall Street, assured that the situation is improving “despite the problems related to the omicron variant, inflation and bottlenecks in the supply chain” . INFLATION, “ADVERSE FACTOR” Throughout 2021, this bank and its rivals have increased profits thanks to their businesses related to markets, stock brokerage, IPOs and operations such as mergers and acquisitions, some activities of those who get a slice as advisers. However, in the fourth quarter JPMorgan has hinted at a slowdown, with a 14% less profit compared to that tranche of 2020 due to higher spending on employee compensation and the effect of low interest rates. In a subsequent conference, the company’s chief financial officer, Jeremy Barnum, said that “modest inflation leading to higher rates” is good, but warned of “adverse factors” related to too high prices that could affect “the next one or two years.” In that sense, regarding its prospects for 2022, he pointed out that the bank expects to see an 8% increase in expenses, up to about 77,000 million dollars, due to “inflationary pressures.” WELLS FARGO COMES BACK Wells Fargo begins to recover from the scandal over its sales practices, which forced it to go through a restructuring and has weighed down its accounts for several years: in 2021, it multiplied its profit by six to 21,548 million dollars and entered 78,492 million , 6% more. Under the baton of Charlie Scharf, CEO for two years, the entity has experienced “radical changes in leadership” and has progressed in its “control, regulation and risk work”, while the reduction of its default reserves has contributed to improve their figures. In the fourth quarter, it stood out above JPMorgan: its main business, consumer banking and loans, entered 1% more, up to 8,733 million, while investment banking 11% more, 3,512 million; and the wealth management area 6% more, 3,648 million. The prospect that the Federal Reserve will raise interest rates in the US in the coming months favors this bank as it is more oriented towards loans, and it calculates that it could increase its interest margin by 8% in 2022, which which has been enthusiastically welcomed by Wall Street analysts. CITIGROUP LEAVES A “DECENT” YEAR Citigroup, under the leadership of Jane Fraser -the first woman to head one of the country’s large banks- this year has undertaken the sale of more than a dozen international retail businesses that weighed down their accounts in Asia , Europe and more recently in Latin America. Its annual profit has doubled to 21,952 million dollars, favored by the reduction of reserves against non-payments, but its turnover has decreased by 5%. It has been a “decent” result, according to Fraser, the result of the improvement in the “credit environment” and the “simplification” of its structure. Like JPMorgan, Citigroup has seen an increase in operating expenses, 18%, in part due to its divestitures but also due to the higher compensation offered to attract and retain employees amid the wave of job resignations that has been experienced in recent years. months in the US By areas, consumer banking reduced its quarterly turnover by 6%, to 6,900 million, while the area of ​​institutional clients improved by 4%, to 9,900 million, driven by investment banking, although fixed income related revenues were down slightly due to low interest rates. EFE nqs/fixed/laa

 
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