Although the economic recovery and higher market interest rates are generally good for banks, the financial reports released by several leading U.S. banks on the 14th showed that the operating expenses increased significantly in the fourth quarter of 2021, which not only dragged down the performance of the quarter, but also suppressed the market sentiment of the day, pouring "cold water" on the just opened financial reporting season.
Analysts believe that the significant increase in operating expenses has made investors pay more attention to the impact of high inflation on enterprise costs and performance. The performance of technology stocks and cyclical stocks is expected to show a significant contrast.
According to the results released by JPMorgan group on the 14th, the company achieved an operating revenue of US $30.349 billion in the fourth quarter of 2021, slightly higher than market expectations, with a year-on-year increase of only 1%. Due to the growth of salary expenses, non interest expenses increased by 11% year-on-year, and its net profit in the quarter was US $10.399 billion, down 11% month on month and 14% year-on-year respectively.
Jeremy Barnum, chief financial officer of JPMorgan group, predicted at the performance presentation that the group may not achieve the 17% return on capital target. He also predicted that JPMorgan's expenses would increase by 8% to about $77 billion in 2022.
Octavio Marenzi, co-founder and CEO of opimas, an American consulting firm, said that JPMorgan's cost management has affected its performance.
According to the performance report released by Citigroup on the same day, the company achieved an operating revenue of US $17.017 billion in the fourth quarter of 2021, a month on month decrease of 2% and a year-on-year increase of 1%. Expenses increased by 15% month on month and 18% year on year respectively. The net profit for the quarter was US $3.173 billion, with a month on month and year-on-year decrease of 32% and 26% respectively.
The performance report released by Wells Fargo Bank on the same day showed that the bank achieved an operating revenue of US $20.856 billion in the fourth quarter of 2021, up 11% month on month and 13% year-on-year respectively. Thanks to the decline in non interest expenses, Wells Fargo achieved a net profit of US $5.75 billion in the quarter, with a month on month and year-on-year increase of 12% and 86% respectively.
Wells Fargo said that the decline in non interest expenses was mainly due to lower labor and consulting expenses, as well as lower restructuring fees and operating losses.
Performance differentiation led to a significant decline of 6.15% and 1.25% in the shares of JPMorgan Chase group and Citigroup, while Wells Fargo rose 3.68%. The drag on bank stocks and bad macro data also led to the Dow Jones industrial average index falling 201.81 points, or 0.56%.
Gerald Cassidy, a large bank analyst at Royal Bank of Canada capital markets, said it is reported that Wells Fargo has formulated plans to cut costs in the future, which may be the reason for the better performance of Wells Fargo's stock price.
Steve sosnick, chief strategist of Yingtou securities, an American securities firm, believes that under the pressure of inflation and supply chain bottlenecks, enterprises with good management ability will have a fair performance.
Jonathan Golub, chief U.S. equity strategist of Credit Suisse Group, said that under the background of the current high inflation, enterprises with relevant inflation themes will naturally win.
Mark heifer, global chief investment officer of wealth management of UBS group, believes that the earnings of Companies in the S & P 500 index in the fourth quarter of 2021 are expected to increase by 30% year-on-year, 7 percentage points higher than the market expectation.
