Better-than-Expected Q1 Results: Chase Profits $2.14B, Citigroup Posts Lowest Loss Since 2007
In what is turning out to be a surprising yet extremely welcome trend in the banking industry, two of the country’s biggest banks which have recently released their first quarter results, have also performed better than financial experts’ expectations.
Chase First Quarter Results
JP Morgan Chase & Co. reported $2.14 billion in earnings for the January to March period of this year; not as solid as the earnings for the same quarter last year, but good enough to beat analysts’ forecasts.
Chase attributes its stellar performance to revenue earned from buying and selling bonds. Having acquired Bear Stearns last year, the bank gained a fair share in the bond market which had record-high issuances last quarter. “January, February and March were some of the biggest bond months ever,” Chase’s CEO Jaimie Dimon said in a statement.
With the Fed’s near-zero lending rates, JP Morgan Chase also saw a steady income stream from the wider interest rate spreads. A growth in deposit base and the brisk consumer lending activity further boosted the bank’s bottom line.
Echoing the sentiments of fellow Wall Street giant Goldman Sachs, Chase CEO said that the bank wants to pay back immediately the $25 billion it received in government funding from the TARP, calling the aid “a scarlet letter.”
Citigroup First Quarter Results
Citigroup on the other hand, the most besieged of the biggest banks, posted a loss of $966 million for the quarter, its lowest one since late 2007. The bank’s reported results translate to a loss per share of 18 cents, way better than the 34 cents per share loss anticipated.
Despite the reported 9-figure loss, these latest results show that things are actually looking up for the troubled bank. In last year’s January to March period, Citibank declared a loss of more than $5 billion. Further, strong trading in its investment banking division doubled Citigroup’s revenues from a year ago to $24.8 billion today.
The huge revenue though dwindled to less than nothing after factoring in credit costs at $10 billion — $7.3 billion in loan losses plus a $2.7-billion increase in future loan losses reserves.
Early last March, doubts about the bank’s stability and talks of nationalizing it sent Citigroup’s stock plummeting to a historic low of 97 cents per share. The stocks rallied however, after Citigroup CEO Vikram Pandit declared that the months of January and March were profitable for the bank.
Banks Not Quite on the Safe Side Yet
Citigroup’s significantly improved performance and Chase’s good showing come in the wake of similar upbeat earnings from two other top US banks, Wells Fargo and Goldman Sachs. While this is a definite sign that banks are slowly inching away from their death beds, the road to full recovery is still a long way off.
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