Solid Profits At Banks As Execs Debate US Economic Risks

New York, (APP - UrduPoint / Pakistan Point News - 12th Apr, 2024) Large American banks reported solid earnings Friday behind still-high interest rates while offering varying views on the likelihood the United States can avoid a near-term recession.

JPMorgan Chase reported higher profits, citing increased asset management and investment banking fees as well as the lift from lofty interest rates, while Citigroup and Wells Fargo reported dipping profits on higher costs.

Compared with a year ago, the banks have seen some uptick in write-offs for bad loans, reflecting the weaker profile of low-income consumers. However, bankers still point to a healthy American employment market and a lingering boost from pandemic-era government spending.

Officials such as Federal Reserve Chair Jerome Powell have pointed to the chance the US economy can achieve a "soft landing" -- shifting relatively painlessly from a period of high growth and elevated inflation to one of slower growth, while avoiding a recession.

While allowing that "many economic indicators continue to be favorable," JPMorgan Chief Executive Jamie Dimon highlighted risks to the outlook, including geopolitical instability and the possible persistence of inflation.

"The market is probably too happy," Dimon said on a conference call with reporters. "I think the chance of bad outcomes is higher than other people think."

Dimon's comments echoed his tone in a shareholder letter this week in which he warned interest rates could go even higher. He emphasized that he is not predicting this but merely pointing it out as a possibility.

On Friday, Citigroup Chief Financial Officer Mark Mason offered a somewhat more optimistic appraisal.

While noting that "there's a lot of risk out there," Mason characterized the global economy as generally "resilient," with consumers mostly healthy and inflation "moving in the direction that central banks want."

Mason sees a "soft landing" in the United States as "increasingly likely" and says Europe appears poised for modest growth after a period of stagnation.

The chief concern, along with geopolitical risk, "is still around inflation" and the question of when, and by how much, rates will fall, Mason said in a conference call with reporters.