Receiving Wide Coverage ...
Happy days: American banks earned a record $171.3 billion in 2016, up 4.9% from a year earlier, while their combined return on equity rose to 9.32%, the highest since 2013, the Federal Deposit Insurance Corp. reported. Fourth-quarter earnings rose 7.7% to $43.7 billion.
Despite the good news, FDIC Chairman Martin Gruenberg said the agency was keeping an eye on how banks might fare in a higher interest rate environment. Although the common wisdom is that higher rates will boost bank profitability, Gruenberg warned that low rates had encouraged some banks, particularly smaller ones, to take on more risk, "which could be exposed when interest rates rise," the Financial Times said. "We want to try to get ahead of the curve in this case and be sure the institutions are positioning themselves to be able to handle a shift in the interest rate environment," Gruenberg said.
On offense: The tone at JPMorgan Chase's annual investor day on Tuesday was notably more positive than it has been. "That marked a change from presentations in previous years," the Wall Street Journal noted, when the bank "had to defend its size, strategy and prospects as the financial sector struggled with stiffer regulation, low interest rates and hefty legal bills." Instead, the bank forecast growth this year, saying it expects its balance sheet to increase to about $2.6 trillion from $2.49 trillion at the end of last year. CEO Jamie Dimon called for bank mergers because he said there are still too many banks.
The bank's chief financial officer said "the time feels right" to start relaxing the rules put in place after the global financial crisis. Marianne Lake said the financial system is stable enough to relax some regulations, allowing banks to "potentially return more capital to shareholders through higher dividends and share buybacks," the FT reported.
It's on: The price war among online stock brokers just got hotter. Charles Schwab, which earlier this month lowered its online trade commissions for stocks and ETFs to $6.95 from $8.95, on Tuesday lowered them again to match Fidelity Investments, which cut its commission rate to $4.95 from $7.95.
Separately, the head of asset and wealth management at JPMorgan Chase, Mary Erdoes, took a swipe at robo advisers, which have been garnering an increasing share of the wealth management business, especially at firms like Schwab and Fidelity. "Human beings need human beings to explain the world to them: that is our job," she said. Still, Chase plans to launch its own robo service later this year.
Wall Street Journal
Another try: The Enterprise Ethereum Alliance announced Tuesday is "the latest stab at expanding open-ledger blockchain technology that could shave billions off the cost of basic Wall Street functions," the paper reported. "So far, there has been more hype than tangible progress on blockchain at banks." American Banker reports IBM and Microsoft could be banks' only choices for blockchain.
"A lot has been done to improve safety and soundness and confidence in financial markets and financial institutions, a lot of which was necessary. However, it is perfectly reasonable and rational — and also normal — after many years, and many, many new rules and requirements, to pause and step back and take a look at the entirety of them, individually and together." — JPMorgan CFO Marianne Lake