JPMorgan Chase, Wells Fargo and Goldman Sachs report big gains

Worried about the economy? You can’t run a big bank.

A number of the nation’s largest lenders, including JPMorgan Chase, Wells Fargo and Goldman Sachs, reported quarterly and full-year financial results on Wednesday that beat analysts’ expectations, largely expressing optimism about the future after President-elect Donald J. Trump will be sworn in next week.

JPMorgan, the country’s largest bank, said it had a fourth-quarter profit of $14 billion and a full-year profit of nearly $59 billion. Wells Fargo earned $5.1 billion in the fourth quarter and $20 billion for the year and said wealthy depositors were putting more money into its higher-priced savings products. Citi, which beat estimates, reported net income of $2.9 billion for the quarter and $12.7 billion for the full year.

Goldman Sachs, which posted profits of $4 billion in the fourth quarter and $14 billion in 2024, said it has been particularly successful in connecting risky companies looking for money with customers willing to make it to borrow, which is typically a sign that, as Wall Street puts it, credit conditions remain fluid .

The mood was so good that in a briefing with reporters, JPMorgan chief financial officer Jeremy Barnum quoted an 89-year-old term from economist John Maynard Keynes, noting that “there is no question that we are in an ‘animal mood.'” moment right now.

To some extent, Wednesday’s earnings results were no surprise: Bank stocks rose even faster in 2024 than the broader market, which ended the year up 23.3 percent, as lenders benefited from a hot stock market and a pick-up in corporate financing activity profited to increase their profits. Shares continued to rise in midday trading.

Still, bankers have traditionally masqueraded as a risk-averse bunch, and given questions about the future of interest rates, the way deals are done and the geopolitical world, their optimism about the future is notable.

It’s a deal

There is nothing an investment banker enjoys more than an easy, enthusiastic environment for corporate finance activities such as mergers and acquisitions and initial public offerings. All of the major banks that reported results on Wednesday said they were in for boom times.

Michael Santomassimo, Wells Fargo’s chief financial officer, said the bank’s corporate customers largely viewed the new administration as pro-business and pro-growth, potentially a boon for dealmaking.

“It feels like a lot of our clients or a lot of market participants are more confident in their ability to execute M&A transactions,” Mr. Santomassimo said.

Goldman Sachs has already been able to sell at a profit some of its so-called “historic capital investments,” or assets it wants to divest, the bank said.

Fires in California

The wildfires that have devastated Southern California will inevitably take a heavy toll on major lenders, who said they did not expect to lose too much money but were monitoring the crisis closely.

A Goldman Sachs spokesman said the bank was analyzing the impact of the destruction of homes and office buildings. While mortgages tied to these properties should be insured, insurance companies that rely on financing from banks and others could come under pressure, he stressed.

JPMorgan expressed similar sentiments. “The analysis is done building by building, mortgage by mortgage,” said Managing Director Jamie Dimon.

JPMorgan said more than 20 of the bank’s employees lost their homes.

Citi said that the areas affected by the Los Angeles fires represented less than 3 percent of the bank’s residential mortgage portfolio and that its total real estate exposure did not appear to amount to much.

Questions remain

Although the stock still rose, Wells Fargo reported revenue that fell short of analysts’ expectations. Mr Santomassimo pointed out that mortgage rates had remained relatively high, which had dampened the bank’s big business of providing home loans.

Some consumers, particularly those with lower incomes, are struggling from the “cumulative impact of inflation,” Santomassimo said.

And while bankers generally welcomed Mr. Trump’s return to the Oval Office, it fell to JPMorgan’s Mr. Barnum and Mr. Dimon to illustrate the possibility of a more melancholy economic future and describe “some excitement.”

Mr. Dimon pointed to a deficit in public spending — Mr. Trump has unveiled major plans to expand various government programs — as a factor that could drive up inflation and prompt the Federal Reserve to raise interest rates, hurting consumers and businesses could lead to a new withdrawal.

While Citi’s corporate clients are generally optimistic, they are struggling with political uncertainty, Chief Financial Officer Mark Mason said. They consider how Mr. Trump’s proposed tariffs, immigration and tax policies could affect the economic landscape.

“To a large extent, all eyes are on the United States,” he said.