Get more Mail & Guardian
Subscribe or Login

US bank execs warn government shutdown adds to economic risks

Bank executives said on Tuesday that economic conditions remained solid but warned that weakening sentiment amid a lengthening US government shutdown could kill growth.

Uncertainty about the shutdown — now the longest in US history — further dims the outlook at a time when questions about trade wars and Federal Reserve policies also are clouding plans, executives said.

“Some would estimate that if it goes on the whole quarter, it can reduce growth to zero,” said JPMorgan Chief Executive Jamie Dimon as the partial shutdown entered its 24th day.

“The shutdown is not going to help the economy,” Dimon said in a conference call.

“The underlying statistics of the economy globally are not bad,” he said. “There’s clearly a slowdown, particularly in Japan, China and Germany and the US but there’s still global growth. And the consumers in good shape.”

Dimon’s remarks came as JPMorgan and Wells Fargo reported mixed results for the fourth quarter, following a similar report Monday from Citigroup.

Citigroup Chief Executive Michael Corbat said the company could “make adjustments” to plans if conditions weakened.

He described a “disconnect” between the growth fears that have disrupted financial markets in recent weeks, and the tight labour markets, good consumer confidence and other anecdotal signs of health.

“Right now we see the biggest risk in the global economy is one of talking ourselves into the next recession as opposed to the underlying fundamentals taking us there,” Corbat said.

Net income at JPMorgan surged 67% to $7.1-billion, with the year-ago period hit by one-time accounting costs from US tax reform.

Revenues rose four percent to $26.8-billion.

JPMorgan’s earnings got a lift from higher net interest income following four Federal Reserve interest rate hikes last year, with the bank generating higher income from credit cards and auto leases. The bank also notched an increase in overall loans.

But the results translated to $1.98 a share compared with the expected $2.21, a rare miss for the US giant, due in part to increased technology spending and weakness in US Treasury bond trading amid market turbulence at the end of 2018.

JPMorgan also set aside increased funds for bad loans. Chief Financial Officer Marianne Lake described the extra provisions for credit losses as due to “select” loans and not indicative of “systemic problems” with credit.

Wells Fargo earnings slip

Wells Fargo reported that fourth-quarter earnings slipped 1.4 percent to $6.1 billion behind a 4.9 percent drop in revenues.

Net interest income rose during the quarter, but the bank saw a drop in overall loans compared with the year-ago period, with declines in consumer loans more than offsetting higher commercial loans.

The results again suggest Wells Fargo is continuing to face residual skepticism from customers following a fake accounts scandal in which the bank opened credit card and other accounts for customers without their knowledge.

Wells Fargo Chief Executive Tim Sloan said he was proud of “transformational changes” at the bank, adding that “we have made meaningful improvements to how we manage risk across the company.”

Shares of JPMorgan reversed early losses and ended up 0.7% at $101.68, while Wells Fargo fell 1.6% to $47.67. Citigroup jumped 4.2% at $61.38.

© Agence France-Presse

Subscribe to the M&G

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them and receive a 40% discount on our annual rate..

John Biers
John Biers
Cover business news for AFP in New York. I post things I find interesting that may not be widely seen, including some opinions I may not agree with.

Related stories

Advertising

Subscribers only

NW Premier Mokgoro ‘meddles’ in contentious R1.5m HOD appointment

Provincial HOD hired despite implication in ‘jobs-for-pals’ probe involving former minister Faith Muthambi

Wild garlic harvesters back in court

Healers say the plant is part of their heritage, but officials counter that it is a protected species

More top stories

Public works tables ‘solutions’ to botched Beitbridge border fence tender

Scopa ‘disappointed’ by slow pace and lack of consequences on Beitbridge irregularities.

ANC resolute over its step-aside decision: Duarte

The governing party has identified 40 members charged with serious crimes who will have to step aside

New Covid-19 variant in South Africa ‘of concern at a...

The Covid-19 B.1.617 variant, first detected in India, is now listed as one of concern, but the World Health Organisation says it does not doubt the efficacy of global vaccines

Your guide to side effects: What you can expect after...

Soon, South Africa will start with its mass vaccine roll-out. We take a look at what to expect when you get vaccinated.
Advertising

press releases

Loading latest Press Releases…
×