Profits are rising: Fluctuating markets mean good business for US banks

High oil prices, sell-offs in chips, rising interest rates: active investors have been busy in the past few weeks. And the banks benefit from this. On the other hand, the takeover business was sluggish. Nevertheless, the large US banks were able to increase their surpluses.

The large US banks earned more in the summer, primarily from their stock transactions in a fluctuating market environment. Still, some fell short of expectations. At the end of the summer, Goldman Sachs had 5.3 billion euros in its cash register, a quarter more than in the previous year, as the US investment bank announced. At competitor JP Morgan Chase, the surplus also increased by the end of September - it ultimately reached $15.3 billion. At Wells Fargo, meanwhile, the flourishing lending business and higher interest income caused profits to rise to almost six billion dollars.

“Regardless of the current complexity and uncertainty in the world, we continue to be very well positioned to serve our customers,” said Goldman Sachs CEO David Solomon. Stock trading revenue rose 72 percent between June and the end of September. Investors had significantly restructured their portfolios. The drivers were the Fed interest rate hike, rising fuel costs and a sell-off in chip stocks. Geopolitical tensions caused by the Middle East conflict also caused market fluctuations, from which the bank's trading departments benefited. Total revenue rose by nearly a quarter to $18.7 billion, making it the second-best quarter in the bank's history for revenue,

The bank's traditional investment banking business grew despite the global lull in mergers and acquisitions. Fee income increased by a fifth to $3.2 billion. In addition, consulting income increased by 18 percent. Asset management recorded an increase in income of 14 percent. The institute has expanded this division in recent years in order to become more independent of the volatile trading business and investment banking. However, Goldman Sachs recorded a slight decline in trading in bonds, currencies and raw materials (FICC).

At JP Morgan, earnings in stock and bond trading rose by 15 percent, slightly more than in investment banking. According to data from the provider Dealogic, JPMorgan defended its leading position in the industry. Sales rose eight percent to $50.2 billion compared to the previous year and, like profits, missed expectations.

Wells Fargo reported net interest income rose five percent to $12.5 billion. The institute is benefiting from the fact that the US Federal Reserve Bank has lifted a regulatory cap on total assets. This gives Wells Fargo more flexibility to make loans. The bank recorded growth particularly in credit cards and car loans as a result of consumers' high willingness to spend.

"While economic uncertainty remains and consumer sentiment remains mixed, our data shows that our retail and business customers are doing well," said Bank. CEO Charlie Scharf. "Consumers are spending more, loan defaults are low, and deposits and investment holdings have grown. Companies continue to have strong balance sheets and losses remain small. While higher interest rates, higher oil prices and persistent inflation pose risks to the economy, strong positive forces such as investment in AI infrastructure, high employment and steady wage growth continue to outweigh the risks," he said.

Citigroup earned $5.2 billion, up from $3.8 billion a year ago. Revenue reached $23.8 billion, driven by growth in Services, Wealth, Markets and Banking. Net interest income increased by 14 percent, while services income increased by 15 percent and equities income increased by 14 percent. Banking grew 6 percent and Wealth reported broad-based growth across its three business lines.

However, US bank stocks have recently come under pressure on the stock market as investors fear negative economic consequences from further possible interest rate increases by the Fed. Analysts expect that the high bond yields should support Wells Fargo's net interest income for the time being. However, rising refinancing costs could dampen economic growth.