Not good enough JPMorgan Chase said its fourth-quarter profit jumped 67%, well short of analysts’ estimates. The bank earned $7.07 billion, or $1.98 a share, compared to expectations of $2.20 a share. Trading revenue fell nearly 6%. Wall Street Journal, Financial Times
Better than expected Wells Fargo reported slightly lower fourth quarter earnings but beat analysts’ per-share estimates as revenue fell by $1 billion.
Receiving Wide Coverage ...
Citi disappoints Citigroup bounced back to a $4.3 billion profit in the fourth quarter from an $18.9 billion loss a year earlier, but the bank’s results were still “mediocre,” showing that “its grand plans for the future could fall short," the Wall Street Journal says. Not only did its “vital trading business struggle under tough market conditions in the fourth quarter,” but “the bigger long-term worry is Citigroup’s somewhat weak performance in Latin America and Asia. Global macroeconomic weakness would be bad for major banks, but for Citigroup especially. Some skepticism about its optimistic projections is warranted.” Wall Street Journal, New York Times, American Banker
Citi’s weak trading results “may herald the beginning of a tough season across Wall Street. While volatility earlier in the year had helped banks’ stock traders produce big gains, December’s moves took a bite out of their larger fixed-income units,” the Journal says.
The bank cut employee pay by $300 million and reduced the risk on its balance sheet as it “battens down the hatches for an uncertain year ahead,” the Financial Times reports. Revenue fell to its lowest quarterly level in two years.
American banks “are strong” but face a “testing 2019” as the post-crisis policies meant to save them slowly unwind, according to the FT.
Crime fighters The U.K. government has established a task force, called the Economic Crime Strategic Board, that will work with the financial sector to fight economic crime. The new body will include the CEOs of Barclays, Lloyds Bank and Banco Santander, plus senior regulatory and law enforcement officials. “We need to take action on all fronts to target the corrupt fraudsters who are lining their pockets with dirty money and living luxury lifestyles at the expense of law-abiding citizens,” said Home Secretary Sajid Javid.
Perhaps coincidentally, the trial of four former Barclays executives began in London Monday. Former CEO John Varley “entered a not guilty plea to two charges of conspiracy to commit fraud by false representation linked to two capital raisings in 2008 during the financial crisis. He is the most senior British banker ever to face a British court in a criminal case since the financial crisis erupted almost a decade ago. The Barclays prosecution is one of the most high profile cases ever brought by the Serious Fraud Office,” the FT says.
Wall Street Journal
Filling a void PayPal named Allison Johnson its executive vice president and chief marketing officer, a post that has been vacant since 2013. A former vice president of world-wide marketing communications at Apple from 2005 through 2011 and a former senior marketing executive at HP, Johnson was most recently a founder and managing partner at West, a hybrid marketing and venture-capital firm.
Financial Times
Blockchain works HSBC said it handled three million foreign exchange transactions worth $250 billion using blockchain technology last year. While that “represents a tiny sliver of its overall currencies business, it still offers a rare example of a blockchain-based product that has proven its worth in wholesale finance, suggesting banks are finding solid applications for the technology.”
Washington Post
New sheriff “Wall Street is nervous” as Rep. Maxine Waters, D-Calif., assumes the chairmanship of the House Financial Services Committee. The first African-American and first woman to lead the committee, she will have “broad influence over the financial world — from Wall Street regulations to flood insurance. She could also use her position to turn up pressure on Wells Fargo, which has admitted to various consumer abuses during the past two years, and Equifax, which had a huge data breach that compromised sensitive data of 148 million people,” the paper notes. It also suggests she could slow the Trump administration's efforts to deregulate banks,
Representative Maxine Waters, a Democrat from California and ranking member of the House Financial Services Committee, center, and Representative Jeb Hensarling, a Republican from Texas and House Financial Services Committee Chairman, right, listen as Ben Carson, secretary of Housing and Urban Development (HUD), not pictured, testifies during a hearing on Capitol Hill in Washington, D.C., U.S., on Wednesday, June 27, 2018. Carson is testifying to discuss oversight of his department. Photographer: Al Drago/Bloomberg
Al Drago/Bloomberg
Elsewhere
Fintech news Finastra CEO Simon Paris said European banks lag far behind their American counterparts when it comes to embracing technology. “You see a big difference between the U.S. banks and the European banks, and I think that's part of the reason why U.S. banks are at twice the level of return on equity over the Europeans,” he told CNBC's Squawk Box Europe. “What the Americans are doing is investing very heavily in productivity and in the actual service itself, (and enabling) the customer journey. You really see that they're getting improvements from those technology investments they made a few years ago.”
Still, not every U.S. regulator is keen on giving fintechs access to the country’s payments system. While the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. are looking to grant federal banking licenses to fintech firms, the Federal Reserve isn’t so anxious for that to happen. “Many Fed officials fear these firms lack robust risk-management controls and consumer protections that banks have in place.”
Quotable
“I don’t want to be the next financial institution to mess up. We will have big bank CEOs raising their right hand a lot more.” — Isaac Boltansky, a Washington policy analyst at firm Compass Point Research & Trading, commenting on Rep. Maxine Waters, D-Calif., taking the reins of the House Financial Services Committee.
The fund is designed to generate a financial return, as well as Community Reinvestment Act credit, for TD. Its inaugural investment is in a mixed-use project that will include 49 affordable housing units.
A government shutdown and a single senator's hold prevented the renewal this week of a bipartisan law that helped banks and other firms defend against hackers.
Federal Reserve Vice Chair Philip Jefferson said Friday that the economic outlook is uncertain and that he was adopting a cautious approach to gauging whether slowing growth and a softening labor market outweigh inflation pressures from tariffs.
The CardWorks subsidiary has officially taken over Ally Financial's Ollo credit card portfolio, ending a five-year dance between the two companies that first had Ally buying CardWorks for $2.7 billion.
The Consumer Bankers Association elected Atlantic Union Bank's Maria Tedesco as its 2025 board chair; Banco Santander's Steffen Doyle is leaving the firm; Commerzbank's lawyers allege an ex-analyst made up sexual harassment claims against a colleague after he lost his job; and more in this week's banking news roundup.
The ongoing government shutdown prevented the Bureau of Labor Statistics from releasing its September jobs report Friday, but job growth appears to be softening. The lack of reliable government data comes as the Federal Reserve mulls further interest rate cuts.
