However, Federal Reserve Chairman Jerome Powell said that the collapse of the SVB was caused by the failure of its management to manage risk, and not by the weakness of the country's banking system. According to Powell, the Federal Reserve and other authorities have taken all necessary measures to ensure the stability of the financial system and protect the interests of depositors.
Despite Powell's statements, the stock market was worried about the stability of banks, which resulted in a sharp drop in their share prices. Moreover, reports began to circulate that the banking crisis could worsen.
At the end of the first quarter of 2023, some banks have already published their reports; so now we can analyze the data provided to understand how financial institutions actually work and whether the chairman of the Federal Reserve was right or wrong.
Reports of the largest US banks
The analysis of financial statements covers the three largest US banks by market capitalization, namely JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corporation (NYSE: BAC), and Wells Fargo & Company (NYSE: WFC). At the time of writing, their capitalization is 412 billion US dollars, 239 billion US dollars and 156 billion US dollars, respectively.
JPMorgan Chase
JPM
JP Morgan Chase & Co.
139.68
U.S. dollar
3.28
2.40
1D
1 W
1M
3M
1 year
JPMorgan Chase & Co. revenue for the first quarter of 2023 increased by 25% to $38.35 billion compared to the same period in 2022, while net income increased by 52% to $12.62 billion or $4.1 per share. Interest income dependent on the Fed's discount rate rose 24% to $20.8 billion.
Comparing deposit volumes to Q4 2022 results to track cash flow dynamics amid the SVB situation, JPMorgan Chase & Co. increased by $33 billion to $1.9 trillion.
Bank of America
TANK
Bank of America Corporation
28.25
U.S. dollar
0.81
2.95
1D
1 W
1M
3M
1 year
Bank of America Corporation's January-March revenue increased 13% to $26.39 billion this year, net income rose 15% to $8.2 billion or $0.94 per share, and interest income increased by 25% to US$14.4 billion. The volume of deposits decreased by $20 billion to $1.9 trillion.
Wells Fargo Co.
WFC
Wells Fargo and Company
40.73
U.S. dollar
0.97
2.44
1D
1 W
1M
3M
1 year
Wells Fargo & Company's revenue grew 17% to $20.73 billion in the first three months of 2023, net income rose 58% to $4.99 billion or $1.23 per share, and interest income rose by 45% to US$13.3 billion. The volume of deposits decreased by $28 billion to $1.4 trillion.
US regional bank reports
We selected the three largest US regional banks by market capitalization, operating in more than twenty states, that are traded on US stock exchanges. These are US Bancorp (NYSE: USB), PNC Financial Services Group Inc. (NYSE: PNC) and Truist Financial Corporation (NYSE: TFC). At the time of writing, they were capitalized at $51.35 billion, $49.68 billion and $41.9 billion, respectively.
US bank
USB
US bank
30.91
U.S. dollar
1.47
4.99
1D
1 W
1M
3M
1 year
US Bancorp Q1 2023 revenue increased 28% to $7.18 billion compared to the same period in 2022, net income increased 9% to $1.7 billion, earnings per share up 17% % to $1.16, and interest income increased. by 22% to US$3.92 billion. Deposits for Q1 2023 increased by $49 billion to $426.5 billion compared to Q4 2022.
PNC Financial Services Group
PNK
PNC Financial Services Group Inc.
121.14
U.S. dollar
5.99
5.20
1D
1 W
1M
3M
1 year
Revenue PNC Financial Services Group Inc. rose 19% to $5.6 billion in Jan-March, net income rose 18% to $1.69 billion, earnings per share rose 23% to $3.98, and interest income rose 15% % to USD 4.2 billion. . The volume of deposits increased by $1.3 billion to $436.2 billion.
PNC Financial Services Group Inc stock chart.
PNC Financial Services Group Inc stock chart.
Trust Financial
TFK
BB&T Corporation
31.23
U.S. dollar
0.70
2.29
1D
1 W
1M
3M
1 year
Truist Financial Corporation's revenue increased 13% to $6.15 billion in the first three months of 2023, net income rose 6% to $1.41 billion or $1.05 per share, and interest income increased 22% % to USD 3.92 billion. The volume of deposits decreased by $5.7 billion to $408 billion.
Truist financial corporation stock chart
Summary
To better understand the situation in the US financial market, we reviewed the quarterly reports of the three largest US banks by capitalization, which also operate outside the country, as well as three large regional banks. The top three are JPMorgan Chase & Co., Bank of America Corporation and Wells Fargo & Company; and the second group includes US Bancorp, PNC Financial Services Group Inc. and Truist Financial Corporation. It should be noted that all of the above companies showed growth in revenue, net profit, earnings per share and interest income in January-March this year.
As for the volume of deposits, the behavior of this indicator is ambiguous. The media has repeatedly reported an active outflow of funds from regional banks to the largest representatives of this sector after the collapse of Silicon Valley Bank. However, given the statistics for January-March, this statement looks ambiguous. Of the three largest banks, only JPMorgan Chase & Co. recorded an increase in deposits, and of the second three banks, only Truist Financial Corporation saw a decrease in this indicator.
The US interest rate reached 5% in April 2023, the same level as in 2006, followed by a rise in financial institution stocks. Looking back at historical data, Jerome Powell was right: SVB's problems were caused by its management's inability to manage risk.
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