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Loan demand seems to be returning, but not fast enough for many bankers and their investors. Bankers discuss the various things holding back a return to blow-out quarters of loan growth.
June 10 -
JPMorgan Chase reported a 19% drop in net income for the first quarter, highlighting how much the lackluster economy and mounting regulations have cut into banks' ability to boost profits.
April 11
JPMorgan Chase (JPM) projected loan growth of about 5% for the full year and indicated the growth rate could accelerate next year, based on loan pipelines in several categories.
The forecast comes as other banks, including U.S. Bancorp (USB) and Regions Financial (RF), have reported some loan growth, although there have been
JPM posted 5% loan growth last year and the New York company earlier this year projected the same growth rate for the entire 2014.
"We are still tracking to that objective," Chief Financial Officer Marianne Lake said at the Morgan Stanley Financials Conference on Wednesday.
"We saw some strength in business banking that we talked about in the first quarter [and] that strength has persisted," she said.
There are strong signs of growth in several categories, including auto lending, credit cards, commercial real estate and middle-market business lending, Lake said.
In a question-and-answer session at the Morgan Stanley conference, Lake elaborated on the growth projections for next year, saying the growth could be at the 5% rate or perhaps higher.
JPMorgan has not made an official lending estimate for 2015, but she said she is hopeful because the bank has "a reasonably good outlook for growth in the economy together with at least early signs of positive sentiments."
Also during Wednesday's presentation, Lake said that
JPMorgan last month warned that second-quarter fixed-income and equities trading would probably drop about 20% from a year earlier. In the first quarter, JPMorgan said
Lake on Wednesday reiterated the forecast of a 20% second-quarter decline in trading and said the shift appeared to be cyclical instead of permanent.
"Over time, we should expect to see these cyclical headwinds abate," she said. However, job cuts may be still be needed.
"It is possible that reductions may be required in response to market evolution, but it will take time to play out," Lake said..
