US banks JP Morgan Chase, Morgan Stanley and Wells Fargo each reported first quarter results on Friday ahead of expectations but warned of the potential impact of US tariffs.
Banks entered 2025 with a bullish outlook, backed by a resilient economy, resurgent deal-making and business-friendly pronouncements from the Trump administration.
The optimism unravelled over the last week, however, as president Donald Trump’s fluctuating tariff announcements stoked concerns about inflation that could tip the economy into recession.
JPMorgan Chase topped first-quarter profit estimates on Friday, driven by record equities trading and higher fees from debt underwriting and merger advisory. Shares of the biggest US bank climbed about 3 per cent before the open.
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“Clients have become more cautious amid an increase in market volatility driven by geopolitical and trade-related tensions,” said chief executive Jamie Dimon. “The economy is facing considerable turbulence, including geopolitics.”
The bank increased its provisions for credit losses to $3.3 billion (€2.9 billion) from $1.9 billion last year. Consumers and businesses could struggle to repay their loans if the new import levies reignite inflation and dampen economic growth.
JPMorgan’s trading revenue climbed 21 per cent to $9.7 billion, higher than the earlier expectations of a low double-digits percentage gain. Equities trading surged 48 per cent to a record $3.8 billion.
Investment banking fees climbed 12 per cent, largely buoyed by optimism in the first three months of 2025 that Mr Trump would enact pro-growth policies, ease regulations and lower taxes.
Earnings were $14.6 billion, or $5.07 a share, for the three months ended March 31st, JPMorgan said. That compares with $13.4 billion, or $4.44 a share, a year earlier.
Meanwhile, Morgan Stanley reported a 26 per cent rise in first-quarter profits, powered by its equities trading business which benefited from volatile financial markets during the early months of the Trump administration.
The US bank said on Friday it had made net income of $4.3 billion (€3.8 billion) in the three months to the end of March, more than a quarter higher than the same period last year and beating analysts’ estimates of $3.7 billion.
“These results demonstrate the consistent execution of our clear strategy to drive durable growth across our global footprint,” said chief executive Ted Pick.
The robust performance was fuelled by the bank’s equities trading business, which posted a 45 per cent surge in revenues to $4.1 billion during the period. The fixed income trading arm reported a 5 per cent rise in revenues to $2.6 billion.
Net new assets at its wealth management business came in at $94 billion for the quarter, slightly lower than the same period last year, but comfortably beating analysts’ expectations.
Wells Fargo’s first quarter profit also beat expectations as the bank cut costs and set aside less money to cover potential loan losses, but its chief executive warned on Friday that US tariffs risk slowing economic growth.
“We support the administration’s willingness to look at barriers to fair trade for the United States, though there are certainly risks associated with such significant actions,” Charlie Scharf said.
Shares of the San Francisco, California-based bank fell 3 per cent in early trading as analysts were disappointed with a drop in interest income. Shares have fallen 10 per cent this year as of the last close.
The bank’s net interest income – the difference between what it earns on loans and pays on deposits – fell 6 per cent to $11.5 billion in the quarter, missing estimates of $11.84 billion.
Executives have previously said interest income would be relatively stable in the first half of 2025, with more growth in the second half.
Citigroup analysts said in a note the softer NII was due to weaker than expected loan growth and lower than expected commercial loan yields.
Still, Wells Fargo reiterated its prior forecast that annual interest income would rise between 1 per cent and 3 per cent in 2025. – Reuters, Financial Times
