Big Bank Bucks – The Banking Earnings
The banking crisis exposed a lot of flaws in our economy, and made us realize that confidence is truly what holds our financial system together. When customers started to lose confidence in the banking sector, it was a domino effect as SVB collapsed along with Signature Bank, and large institutions like Credit Suisse needed saving. Likely being the largest economic event in the first quarter of 2023, investors were curious as to how this would affect future economic data, and we got our first taste on Friday.
The big banks of America reported their quarterly results to kick off what is going to be a vital earnings season for investors, and it was a delightful surprise. JPMorgan’s profit of $12.6 billion crushed expectations, with their CEO Jamie Dimon being one of the key figures in the latest banking fiasco. Citigroup reported an impressive $4.6 billion profit with revenue increasing by 12 percent, and Wells Fargo followed suit. The big picture showed that the issues regarding the regional banks did not spread throughout the banking industry as rising interest rates continued to benefit the big banks, but more importantly it signifies a change in consumer sentiment towards the banks. Before the SVB collapse, customers were becoming attracted to regional banks due to low rate deposits and higher rates of lending, along with how they were making the sector equitable by providing banking to smaller customers. Now, confidence in regional banks is at a major low, and there has been increased trust in big banks to keep money safe, showing that the crisis might have actually helped these companies. Earnings season got off to a good start, but now the broader economy will be seen with the largest companies providing us with their quarterly results.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.