Earnings: JPMorgan Chase’s first-quarter earnings rose 35% to a record high of $8.71 billion. PNC said its quarterly profit rose 16% to $1.23 billion. Wells Fargo's profit rose 5.5% to $5.94 billion, but revenue fell to $21.9 billion from $22.3 billion. Citigroup's profit jumped to $4.62 billion from $4.09 billion, while revenue climbed to $18.87 billion from $18.37 billion.
Receiving Wide Coverage ...
Mulvaney returns to the Hill: On his second day of testimony on Capitol Hill, Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, Senate Banking Committee Democrats on the Senate Banking Committee criticized the exorbitant salaries of some people on his staff. Mulvaney responded, the average pay at the agency is $195,000 a year, the same as under his predecessor, Richard Cordray. Wall Street Journal, Washington Post, American Banker
At the hearing, Sen. John Kennedy, R-La., said he planned to file complaints with the CFPB against two big banks over their recent decision to stop doing business with gun makers. “Our friends at Citigroup and Bank of America apparently aren’t busy enough with their banking business; they have decided that they are going to set policy for the second amendment,” he said. New York Times, American Banker
Separately, a federal appeals court heard oral arguments in a case challenging Mulvaney’s right to head the CFPB since he’s also head of the White House’s Office of Management and Budget. According to the Wall Street Journal, the judges “appeared skeptical” about Mulvaney holding both offices. But they also “voiced doubts” about Leandra English’s claim to be the rightful successor to Richard Cordray, who named her acting director on his last day in office last November.
What’s it all mean?: It was an interesting week in Washington, with proposals by the Federal Reserve to ease bank capital rules and make annual stress tests more transparent. The paper discusses if this will mean true banking reform.
On credit watch: S&P Global Ratings put Deutsche Bank’s long-term A-minus bond rating on credit watch with negative implications. “Deutsche Bank might be subject to a longer lasting and/or significantly more costly restructuring of the business model than we currently expect,” the ratings agency said. “This could lead to deeper underperformance compared with peers, from a financial and customer franchise point of view.”
Baby steps: Beyond the hype of artificial intelligence in the financial services industry “the reality is much more complicated,” the paper concludes. A survey of 30 leading banks on their use of AI found “an industry excited about the prospects of a technology that can help cut costs and boost returns. Yet not only is there little consensus on how AI should be used in banking, many of the current efforts to apply machine learning are modest. Rather than racing towards an AI-enabled future, the industry is feeling its way forward.”
New York Times
Higher rates: Online lenders are offering much higher deposit rates than brick-and-mortar banks. Rates at online accounts now average more than 1.4% compared to less than 0.1% at traditional banks, according to Fitch.
“You’ve taken obvious joy in talking about how the agency will help banks a lot more than it will help consumers and how upset this must make me. But here’s what you don’t get, Mr. Mulvaney: This isn’t about me. You are hurting real people to score cheap political points.” — Sen. Elizabeth Warren, D-Mass.