Breaking News This Morning ...
Earnings: JPMorgan Chase, the nation's biggest bank by assets and the first major bank to report third quarter earnings, said profit rose 7.1% and revenue increased 2.7% compared to the year earlier period, beating forecasts. Wall Street Journal, Financial Times
Citigroup said its quarterly profit increased 8% while revenue rose 2%, also beating analysts' estimates.
Receiving Wide Coverage ...
In like Flint: John Flint, currently the head of the bank's retail banking and wealth management unit, has been named the new CEO of HSBC, succeeding Stuart Gulliver. The move is effective February 21, 2018. Wall Street Journal, Financial Times, New York Times
Bigger than China: BlackRock, the world's largest money manager, said its assets under management climbed to $5.98 trillion at the end of September, nearly $1 trillion more than a year earlier. The company has taken in $264 billion in new investor cash since the beginning of the year, or more than $1.5 billion every business day. BlackRock also beat earnings forecasts for the quarter.
Along with Vanguard Group, "BlackRock is the beneficiary of a global rush by investors to place their money in so-called passive investments, rather than the traditional actively managed mutual funds," the New York Times commented. Combined, the two now manage about $10.7 trillion, "almost as much as the gross domestic product of China, the world's second-largest economy at $11.2 trillion in 2016," the Wall Street Journal noted. Wall Street Journal, Financial Times, New York Times
Wall Street Journal
Are you ready for earnings season?: Bank earnings season kicked off today, with JPMorgan Chase and Citigroup reporting results (see above), followed by Bank of America and Wells Fargo on Friday and Goldman Sachs and Morgan Stanley next week. Here are five things to keep an eye on, according to the Journal. (See also American Banker's preview: Hoping for loan growth, bracing for stagnation: 3Q preview)
Naming names: The International Monetary Fund warned that some of the world's largest banks—including Deutsche Bank, Citigroup and Barclays, plus a few Japanese institutions—may have difficulty remaining sufficiently profitable over the next few years. "About a third of banks by assets may struggle to achieve sustainable profitability, underscoring ongoing challenges and medium-term vulnerabilities," the IMF said in its biannual Global Financial Stability Report. Other banks on the list include Société Générale, UniCredit and Standard Chartered.
"It is unusual for a body like the IMF to identify banks by name," the Journal noted.
Off to the Sunbelt?: AllianceBernstein is considering moving some of its staff out of New York as part of a broad cost-cutting effort, "the latest example of money managers trying to cut expenses as investors plow money into index-tracking funds with lower fees," the Journal reported. The company is looking to move employees to places like Charlotte and San Antonio. No moves are likely to be completed until late next year.
New York Times
Cooking up ideas: Goldman Sachs has set up a small team of bankers known within the bank as the Innovation Lab, "to cook up supposedly clever ideas for big clients," the Times reports. "The resulting acquisitions may end up destroying value for the shareholders of the companies involved, but Goldman's own investors should be pleased the investment bank is trying new things," the Times commented.
"Institutions that are not profitable might not be able to generate enough capital in the future should adverse shocks hit. It might become a financial stability risk not to be profitable." — Tobias Adrian, director of the IMF's monetary and capital markets department.