JPMorgan Chase and Wells Fargo, two banking giants, reported better-than-expected third-quarter results, indicating resilience in the US economy. The banks’ performance points to the possibility of a soft landing, where inflation slows without causing a recession.
JPMorgan’s CFO, Jeremy Barnum, stated that the earnings are “consistent with the soft-landing narrative,” with the bank’s consumer and corporate customers showing strength. Similarly, Wells Fargo’s CFO, Mike Santomassimo, noted that lower-income consumers are the most stressed, but the stress has not substantially migrated to other client cohorts.
However, the banks are not without their challenges. JPMorgan expects its net interest income to drop next year as the Federal Reserve lowers interest rates, while Wells Fargo’s net interest income, a measure of the difference between what banks make from lending and pay for deposits, dropped 11% from a year earlier. Despite these concerns, the banks’ stocks rose significantly on the news, with JPMorgan up more than 4% and Wells Fargo up more than 5% on Friday.
