In recent months, there has been a lot of talk of a recession, but big banks are showing no major signs of weakness ahead of a recession, according to a report by CNN.
Although big banks are preparing for tougher economic times, such as putting aside more money to cover bad loans, credit card spending is still meeting expectations and banks haven’t encountered major issues.
“If you didn’t look at anything else — you just looked at the bank numbers — you wouldn’t be thinking there’s a recession around the corner,” Mark Conrad, a portfolio manager at Algebris Investments, told CNN.
Investment banking revenue has fallen, with JPMorgan and Morgan Stanley reporting 61% and 55% drops respectively. However, credit and debit card spending is up 15% year-over year and travel and dining rose by 34% as well.
“You can see how resilient the consumer is in the US through the elevated payment rates and the low level of credit losses,” Citi CEO Jane Fraser said on a call with analysts.
Mortgage rates have also gone up as the Federal Reserve has raised its benchmark rate.
Overall, banks are being cautious in case of a recession, with JPMorgan, Citi and Wells Fargo setting aside billions to cover bad loans just in case.
Courtesy: ATM Marketplace