Wells Fargo, JPMorgan Chase and Citigroup each recorded a rise in second quarter profits in their consumer divisions (Credit: iStock)
Spurred by low interest rates, consumers are taking out more mortgages, bolstering the profits of banks’ consumer divisions. But forecasted cuts by the Federal Reserve have Wall Street trading down.
Wells Fargo, JPMorgan Chase and Citigroup each recorded a rise in second quarter profits in their consumer divisions, according to the Wall Street Journal. Consumer mortgages originations jumped at each of the banks, as did credit card spending.
This was largely driven by low unemployment, increased wages and the Fed’s low interest rates that have satisfied consumers who are willing to spend more.
But commercial trading business was down. Goldman Sachs, which does not have a significant consumer business, was the only bank to record a lower year-over-year second quarter profit, with a 3 percent drop in trading revenue.
In June the Fed opted to keep interest rates steady, while it considered cutting interest rates further, sparking concerns of an economic slowdown. In addition to unease about further Fed rate cuts, multiple tariff battles with China and Mexico has also unnerved traders, and contributed to the decline in Wall Street revenue.
JPMorgan’s trading revenue fell 6 percent, and its investment banking profits dropped 8 percent. The bank readjusted its net lending profits forecast to $57.5 billion, down from $58 billion for the year.
“The consumer in the United States is doing fine,” JPMorgan CEO James Dimon told analysts, the outlet reported. “The business sentiment is a little bit worse.” [WSJ] — David Jeans