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Tag: Wall Street

  • NYCB shares jump after new CEO gives two-year plan for “clear path to profitability”

    NYCB shares jump after new CEO gives two-year plan for “clear path to profitability”

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    A New York Community Bank stands in Brooklyn, New York City, on Feb. 8, 2024.

    Spencer Platt | Getty Images

    New York Community Bank on Wednesday posted a quarterly loss of $335 million on a rising tide of soured commercial loans and higher expenses, but the lender’s stock surged on its new performance targets.

    The first-quarter loss, equal to 45 cents per share, compared to net income of $2.0 billion, or $2.87 per share a year earlier. When adjusted for charges included merger-related items, the loss was $182 million, or 25 cents per share, deeper than the 15 cents per share loss estimate from LSEG.

    “Since taking on the CEO role, my focus has been on transforming New York Community Bank into a high-performing, well-diversified regional bank,” CEO Joseph Otting said in the release. “While this year will be a transitional year for the company, we have a clear path to profitability over the following two years.”

    The bank will have higher profitability and capital levels by the end of 2026, Otting said. That includes a return on average earning assets of 1% and a targeted common equity tier 1 capital level of 11% to 12%.

    Otting took over at the beleaguered regional bank at the start of April after an investor group led by former Treasury Secretary Steven Mnuchin injected more than $1 billion into the lender.

    Shares of the bank jumped 15% in premarket trading.

    This story is developing. Please check back for updates.

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  • Jim Cramer ranks first-quarter earnings from 6 major U.S. banks. Our portfolio stocks fared well

    Jim Cramer ranks first-quarter earnings from 6 major U.S. banks. Our portfolio stocks fared well

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    Club names Morgan Stanley was No. 1 and Wells Fargo was No. 3, according to Jim Cramer's analysis.

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  • Regional banks will dominate rest of earnings season this week. Here’s what analysts expect

    Regional banks will dominate rest of earnings season this week. Here’s what analysts expect

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  • Morgan Stanley tops expectations on wealth management, trading and investment banking results

    Morgan Stanley tops expectations on wealth management, trading and investment banking results

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    Morgan Stanley on Tuesday posted results that topped analysts’ estimates for profit and revenue as wealth management, trading and investment banking exceeded expectations.

    Here’s what the company reported:

    • Earnings: $2.02 a share, vs. $1.66 expected, according to LSEG
    • Revenue: $15.14 billion, vs. expected $14.41 billion

    The bank said first-quarter profit rose 14% from a year earlier to $3.41 billion, or $2.02 a share, helped by rising results at each of its three main divisions. Revenue climbed 4% to $15.14 billion.

    Shares of the bank jumped about 2.5%.

    Wealth management revenue rose 4.9% to $6.88 billion, topping the StreetAccount estimate by $230 million, as rising markets helped boost fee revenue and offset a decline in interest income.

    Equities trading revenue increased 4.1% to $2.84 billion, $160 million more than expected, fueled by derivatives volumes. Fixed income trading revenue slipped 3.5% to $2.49 billion, but that still topped expectations by $120 million.

    Investment banking revenue jumped 16% to $1.45 billion, edging out the $1.40 billion estimate, as increases in debt and equity issuance offset lower fees from acquisitions.

    The firm’s smallest division, investment management, was the only major business to underperform expectations. While revenue climbed 6.8% to $1.38 billion, it was below the $1.43 billion StreetAccount estimate.

    CEO Ted Pick’s tenure had kicked off on a rocky note, as high interest rates have incentivized the bank’s wealth management customers to move cash into higher-yielding securities. The bank’s shares have declined nearly 7% this year before Tuesday.

    But like rivals including Goldman Sachs and JPMorgan Chase, Morgan Stanley was helped by strong trading and investment banking results in the quarter.

    Last week, JPMorgan, Wells Fargo and Citigroup each topped expectations for revenue and profit, a streak continued by Goldman on Monday and Bank of America on Tuesday.

    Analysts questioned Pick about reports that multiple U.S. regulators are investigating Morgan Stanley for potential shortfalls in how it screens clients for its wealth management division.

    “We’ve been focused on our client on-boarding and monitoring processes for a good while,” Pick said Tuesday. “We have been spending time, effort and money for multiple years, and it is ongoing. We’ve been on it and the costs associated with this are largely in the expense run rate.”

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  • Bank of America tops estimates on better-than-expected interest income, investment banking

    Bank of America tops estimates on better-than-expected interest income, investment banking

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    Bank of America on Tuesday reported first-quarter earnings that topped analysts’ estimates for profit and revenue on better-than-expected interest income and investment banking.

    Here’s what the company reported:

    • Earnings: 83 cents a share adjusted, vs. 76 cents expected, according to LSEG
    • Revenue: $25.98 billion, vs. $25.46 billion expected

    The bank said profit fell 18% to $6.67 billion, or 76 cents a share; excluding a $700 million FDIC assessment, profit was 83 cents a share. Revenue slipped 1.6% to $25.98 billion as net interest income declined from a year earlier.

    Net interest income, or the difference between what the company earns from loans and investments and what it pays customers for their deposits, was $14.19 billion, topping the $13.93 billion StreetAccount estimate.

    The bank’s interest income was a “slight positive surprise,” though it’s unclear if this means the metric will improve earlier than expected, Wells Fargo analyst Mike Mayo said Tuesday in a research note.

    The bank’s total deposits of $1.95 trillion climbed roughly 1% from the fourth quarter, while loans were essentially unchanged at $1.05 trillion.

    “I was unimpressed with deposits and loans being flat,” David Wagner, portfolio manager at Aptus Capital Advisors, said in an email. “The only areas that BAC did well was where other banks have shown strength.”

    Bank of America CFO Alastair Borthwick told analysts Tuesday in a conference call that NII will likely dip in the second quarter to about $14 billion on drops in wealth management and markets interest income. Though it could grow in the second half of the year, he said.

    NII has been declining in recent quarters as funding costs have climbed along with the rise in interest rates.

    Shares of the bank fell more than 3%.

    Bank of America’s share decline Tuesday has more to do with the rise in the 10 year Treasury yield than first quarter results, according to KBW analyst David Konrad. Shares of many banks have been yoked to yields in the past year, as rising yields means some bond and loan holdings decline in value.

    Investment banking revenue jumped 35% to $1.57 billion, exceeding the $1.36 billion estimate and following a similar rise at rivals including Goldman Sachs and JPMorgan Chase.

    It’s also considerably higher than the guidance given by Borthwick, who told analysts last month to expect investment banking revenue to rise by 10% to 15% from a year earlier.

    The bank’s trading operations also edged out expectations. Fixed income revenue fell 3.6% to $3.31 billion, slightly beating the $3.24 billion estimate, and equities revenue rose 15% to $1.87 billion, compared with the $1.84 billion estimate.

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  • Goldman Sachs reports earnings before market open — here’s what the Street expects

    Goldman Sachs reports earnings before market open — here’s what the Street expects

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    David Solomon, Chairman & CEO Goldman Sachs, speaking on CNBC’s Squawk Box at the World Economic Forum Annual Meeting in Davos, Switzerland on Jan. 17th, 2024.

    Adam Galici | CNBC

    Goldman Sachs is scheduled to report first-quarter earnings before the opening bell Monday.

    Here’s what Wall Street expects:

    • Earnings: $8.56 per share, according to LSEG
    • Revenue: $12.92 billion, according to LSEG
    • Trading Revenue: Fixed income of $3.64 billion and equities of $2.95 billion, per StreetAccount
    • Investing Banking Revenue: $1.77 billion, per StreetAccount

    Goldman Sachs CEO David Solomon has taken his lumps in the past year, but hope is building for a turnaround.

    Dormant capital markets and missteps tied to Solomon’s ill-fated push into retail banking should give way to stronger results this year.

    Rivals JPMorgan Chase and Citigroup posted better-than-expected trading results and a rebound in investment banking fees in the first quarter; investors will be disappointed if Goldman doesn’t show similar gains.

    Unlike more diversified rivals, Goldman gets most of its revenue from Wall Street activities. That can lead to outsized returns during boom times and underperformance when markets don’t cooperate.

    After pivoting away from retail banking, Goldman’s new emphasis for growth has centered on its asset and wealth management division. The business could see gains from buoyant markets at the start of the year, though it also has taken write-downs tied to commercial real estate in the past.

    Solomon may also field questions about the latest examples of an exodus in senior managers, including his global treasurer Philip Berlinski and Beth Hammack, co-head of the bank’s global financing group.

    On Friday, JPMorgan, Citigroup and Wells Fargo each posted quarterly results that topped estimates.

    This story is developing. Please check back for updates.

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  • Citigroup tops estimates for first-quarter revenue on better-than-expected Wall Street results

    Citigroup tops estimates for first-quarter revenue on better-than-expected Wall Street results

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    Citigroup on Friday posted first-quarter revenue that topped analysts’ estimates, helped by better-than-expected results in the bank’s investment banking and trading operations.

    Here’s how the company performed, compared with estimates from LSEG, formerly known as Refinitiv:

    • Earnings: $1.86 per share, adjusted, vs. $1.23 expected
    • Revenue: $21.10 billion vs. $20.4 billion expected

    The bank said profit fell 27% from a year earlier to $3.37 billion, or $1.58 a share, on higher expenses and credit costs. Adjusting for the impact of FDIC charges as well as restructuring and other costs, Citi earned $1.86 per share, according to LSEG calculations.

    Revenue slipped 2% to $21.10 billion, mostly driven by the impact of selling an overseas business in the year-earlier period.

    Investment banking revenue jumped 35% to $903 million in the quarter, driven by rising debt and equity issuance, topping the $805 million StreetAccount estimate.

    Fixed income trading revenue fell 10% to $4.2 billion, edging out the $4.14 billion estimate, and equities revenue rose 5% to $1.2 billion, topping the $1.12 billion estimate.

    The bank also posted an 8% gain to $4.8 billion in revenue in its Services division, which includes businesses that cater to the banking needs of global corporations, thanks to rising deposits and fees.

    Shares of the bank fell nearly 2% Friday.

    Citigroup CEO Jane Fraser previously said that her sweeping corporate overhaul would be complete by March, and that the firm would give an update to severance expenses along with first-quarter results.

    “Last month marked the end to the organizational simplification we announced in September,” Fraser said in the earnings release. “The result is a cleaner, simpler management structure that fully aligns to and facilitates our strategy.

    Last year, Fraser announced plans to simplify the management structure and reduce costs at the third-biggest U.S. bank by assets. The bank on Friday reiterated its medium term targets for returns hitting at least 11% and generating at least $80 billion in revenue this year.

    JPMorgan Chase reported results earlier Friday, and Goldman Sachs reports on Monday.

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  • JPMorgan Chase is set to report first-quarter earnings — here’s what the Street expects

    JPMorgan Chase is set to report first-quarter earnings — here’s what the Street expects

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    Jamie Dimon, President and CEO of JPMorgan Chase, speaking on CNBC’s “Squawk Box” at the World Economic Forum Annual Meeting in Davos, Switzerland, on Jan. 17, 2024.

    Adam Galici | CNBC

    JPMorgan Chase is scheduled to report first-quarter earnings before the opening bell Friday.

    Here’s what Wall Street expects:

    • Earnings: $4.11 a share, according to LSEG
    • Revenue: $41.85 billion, according to LSEG
    • Net interest income: $23.18 billion, according to StreetAccount
    • Trading Revenue: Fixed income of $5.19 billion and equities of $2.57 billion, according to StreetAccount

    JPMorgan will be watched closely for clues on how banks fared at the start of the year.

    While the biggest U.S. bank by assets has navigated the rate environment well since the Federal Reserve began raising rates two years ago, smaller peers have seen their profits squeezed.

    The industry has been forced to pay up for deposits as customers shift cash into higher-yielding instruments, squeezing margins. Concern is also mounting over rising losses from commercial loans, especially on office buildings and multifamily dwellings, and higher defaults on credit cards.

    Still, large banks are expected to outperform smaller ones this quarter, and expectations for JPMorgan are high. Analysts believe the bank can boost guidance for 2024 net interest income as the Federal Reserve is forced to maintain interest rate levels amid stubborn inflation data.

    Analysts will also want to hear what CEO Jamie Dimon has to say about the economy and the industry’s efforts to push back against efforts to cap credit card and overdraft fees.

    Wall Street may provide some help this quarter, with investment banking fees for the industry up 11% from a year earlier, according to Dealogic.

    Shares of JPMorgan have jumped 15% this year, outperforming the 3.9% gain of the KBW Bank Index.

    Wells Fargo and Citigroup are scheduled to release results later Friday, while Goldman Sachs, Bank of America and Morgan Stanley report next week.  

    This story is developing. Please check back for updates.

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  • ‘Lose-lose situation’: New Swiss bank laws could derail UBS challenge to Wall Street giants

    ‘Lose-lose situation’: New Swiss bank laws could derail UBS challenge to Wall Street giants

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    Beat Wittman, partner at Porta Advisors, reviews new Swiss banking regulation and its potential impact on UBS in the wake of its absorption of Credit Suisse.

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  • What does high March inflation mean for the Fed and the economy?

    What does high March inflation mean for the Fed and the economy?

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    What does high March inflation mean for the Fed and the economy? – CBS News


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    The annual inflation rate hit 3.5% in March, the highest since September. Martin Baccardax, senior editor and chief markets correspondent at “TheStreet,” joins CBS News to examine what’s behind the increase and what it means for interest rate cuts.

    Be the first to know

    Get browser notifications for breaking news, live events, and exclusive reporting.


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  • Wall Street gets key inflation data next week amid concerns the stock market is overbought

    Wall Street gets key inflation data next week amid concerns the stock market is overbought

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  • Free trade flaws fueled Trump’s rise in 2016 — and the problems remain, top economist says

    Free trade flaws fueled Trump’s rise in 2016 — and the problems remain, top economist says

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    Former U.S. President Donald Trump speaks after attending a wake for New York City Police Department (NYPD) officer Jonathan Diller, who was shot and killed while making a routine traffic stop on March 25 in the Far Rockaway section of Queens, in Massapequa Park, New York, U.S., March 28, 2024. 

    Shannon Stapleton | Reuters

    Decades of trade deficits and a strong dollar created too many “losers” in the U.S. economy who turned to Donald Trump’s protectionist policies, according to Richard Koo, chief economist at the Nomura Research Institute — and those conditions remain.

    Trump’s “America First” economic policies led his administration to institute a slew of trade tariffs on China, Mexico, the European Union and others, including slapping 25% duties on imported steel and aluminum.

    As the Republican nominee for the 2024 presidential election, Trump has proposed a baseline 10% tariff on all U.S. imports and a minimum levy of 60% on imported Chinese products.

    These policies have drawn widespread criticism from economists, who argue that tariffs are counterproductive, as they make imported goods more expensive for the average American.

    Speaking to CNBC’s Steve Sedgwick on the sidelines of the Ambrosetti Forum on Friday, Koo said protectionism was a “horrible thing,” but that Trump’s approach “does have some economic logic.”

    “When we studied economics and free trade, in particular, we were taught…that free trade always creates both winners and losers in the same economy, but the gain that winners get is always greater than the loss of the losers, so the society as a whole always gains. So that’s why the free trade is good,” he noted.

    Koo nevertheless argued that this rests on the assumption that trade flows are balanced or in surplus, while the U.S. has been running huge deficits for the last forty years, which have expanded the number of “losers.”

    “By 2016, the number of people who consider themselves losers of free trade, were large enough to elect Trump president, and so we have to really go back and say to ourselves: what did we do wrong to allow this many people in United States to view themselves as losers of free trade?” he said.

    For Koo, the key problem was the exchange rate, as the strength of the U.S. dollar incentivized foreign imports and hurt U.S. companies exporting around the world.

    “We kind of let the exchange rate be decided by so-called market forces, speculators, my clients, Wall Street types, but the foreign exchange rate has to be set in a way that the number of losers does not grow to a point where the free trade itself is lost,” Koo said.

    He pointed to a similar pivotal moment in 1985, when President Ronald Reagan faced the same issue of a strong dollar and rising protectionism. At the time, Reagan responded by facilitating the Plaza Accord with France, West Germany, Japan and the United Kingdom to depreciate the U.S. dollar against the respective currencies of these countries through intervention in the foreign exchange market.

    This Fed is 'overly data-dependent,' says Allianz chief economic advisor

    “That’s the kind of thing we should have been more conscious of doing. Instead of allowing [the] dollar to go wherever the market takes [it], and then these people who are not as fortunate as we are in the financial markets, end up suffering and end up voting for Mr. Trump,” Koo added.

    He argued that economists need to move beyond the idea that the trade deficit is simply down to “too much investment” and “too few savings” in the U.S., as this means deficit can only be reduced by remaining in recession until domestic demand weakens so much that U.S. companies can export more goods, which would not be possible in a democracy.

    Koo again pointed to past dealings with Japan, suggesting that if the argument held that overseas companies are just filling in where U.S. companies cannot satisfy domestic demand, then the American companies fighting Japanese firms in the 1970s and 70s should have recorded huge profits due to excess demand.

    “But that did not actually happen. It’s the opposite that happened. So many of them went bankrupt, so many losers of free trade were left in the streets, because it was not savings and investment issue, it was the exchange rate issue,” he said.

    “The dollar should have been much weaker, and Reagan understood that that’s why he took that action.”

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  • Wall Street could be in for another good quarter after an exuberant start to the year, history shows

    Wall Street could be in for another good quarter after an exuberant start to the year, history shows

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  • U.S. stocks have ‘limited upside’ from here, says Goldman Sachs Asset Management

    U.S. stocks have ‘limited upside’ from here, says Goldman Sachs Asset Management

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    The floor of the New York Stock Exchange.

    Brendan McDermid | Reuters

    U.S. stocks have “limited upside” from here, given the macroeconomic backdrop — and investors should be looking for better opportunities elsewhere, according to Goldman Sachs Asset Management.

    The U.S. economy has been surprisingly resilient in the face of the Federal Reserve‘s aggressive monetary policy tightening over the last two years, defying expectations of a 2023 recession.

    Though GSAM’s base case is for the Fed to engineer a soft landing and for the U.S. economy to avoid recession, James Ashley, head of international market strategy, told CNBC on Wednesday that if a recession were to come, it would be this year.

    “The Fed only began to hike in March of ’22, so when we’re talking about recession risks in 2023, that would have assumed a very rapid passthrough from the transmission of monetary policy into the real economy. In other words, it was premature,” Ashley said.

    “Monetary policy typically operates with a lag of about two years so if you’re going to see that recession — and it is an ‘if’ statement, the base case is we don’t get a recession — but if you were ever going to get a recession, it would be ’24, not ’23.”

    The Fed held interest rates steady at a target range of 5.25-5.5% at its March meeting, and markets are pricing a first 25 basis point cut in June as the central bank begins to unwind its restrictive monetary policy in light of falling inflation a slowing economy.

    Ashley noted that for stock markets, “a little bit of weakness is your friend” as the associated disinflationary pressure gives the Fed the capacity to begin cutting rates, but with the market having priced in a lot of the expected policy loosening, GSAM still believes the recent bull run may be running out of road.

    “We do tend to think that U.S. equities right now are fairly valued but there’s limited upside at these valuations. The better opportunities might be in other markets,” he concluded.

    India

    Where emerging markets are concerned, the Wall Street giant’s asset management arm sees India as a “strategic long-term growth story,” Ashley said.

    “Where we see many other economies beginning to slow for both secular and indeed cyclical reasons, in India’s case, we see the start of a very significant upswing,” he added.

    “We’re looking at an economy here that could be growing at double-digit nominal GDP rates for the foreseeable future.”

    India will continue to be important but 'we're not giving up on China,' says Mark Mobius

    Given the rally already enjoyed in Indian markets of late, Ashley acknowledged that one could not argue that the country’s stocks are “cheap” right now, but insisted there was still “significant upside based on that growth story.”

    “How do you play that? I think there’s an across-the-board story. It’s not about one particular sector, and if you look at the small and mid-caps in particular, there’s a huge opportunity to generate alpha in that market,” he added.

    Japan

    In contrast to most central banks across major economies, which are deciding when to begin cutting rates, the Bank of Japan last week hiked them for the first time in 17 years, finally ending its experiment with negative rates and unconventional easing tools that were aimed at reflating the world’s fourth-largest economy.

    Japanese stocks were a strong performer in 2023 and into this year, but Ashley argued that this significant monetary policy shift means they have more room to run.

    Japan is seen as an 'investable' market again: JIC CIO

    “Japan is the one major economy where inflation is not a problem, it’s a solution. It’s a solution to a 30-year-old problem,” he said, adding that the central bank’s goal now is “not choking off inflationary pressures” but “embracing them.”

    “What that means from an equity perspective is that firms suddenly have more pricing power. So when we look at developed markets right now, in our view, Japan is the most attractive both on the short-term and indeed the long-term, so there’s significantly further to go, we think,” he concluded.

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  • Immigration is boosting the U.S. economy and has been ‘really underestimated,’ says JPMorgan research head

    Immigration is boosting the U.S. economy and has been ‘really underestimated,’ says JPMorgan research head

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    U.S. commuters.

    Caroline Purser | The Image Bank | Getty Images

    The recent surge in immigration into the U.S. is helping to bolster the economy despite a raft of global challenges, according to Joyce Chang, chair of global research at JPMorgan.

    The U.S. Federal Reserve on Wednesday raised its U.S. GDP growth projection to 2.1% for 2024, up from 1.4% in its December outlook, as the economy continues to display resilience despite high interest rates as the central bank seeks to manage inflation levels.

    Meanwhile, the labor market has stayed relatively hot despite tighter monetary conditions, with unemployment remaining below 4% in February and the economy adding 275,000 jobs.

    The Fed also raised its projections for its preferred measure of inflation: core personal consumption expenditure. It now expects the core PCE to come in at 2.6%, up from 2.4%, after January and February inflation prints dampened hopes that price increases were fully under control.

    The core consumer price index, which excludes volatile food and energy prices, rose 0.4% in February on the month and was up 3.8% on the year, slightly higher than forecast.

    “We are still seeing the phenomena around the globe that services inflation is still well above where it was before the pandemic, so we’re looking at 3% for core CPI, but I think one thing that was really underestimated in the U.S. was the immigration story,” Chang told CNBC’s “Squawk Box Europe” on Thursday.

    “The U.S. population is almost 6 million higher than it was two years ago or so, and so that has accounted for a lot of the increase in consumption, when you see the very low unemployment numbers as well.”

    She noted that upward pressure on wages and housing costs, along with a resurgence in energy prices so far this year, suggest that the Fed is “not out of the woods yet” when it comes to inflation.

    A recent Congressional Budget Office report estimated that net immigration to the U.S. was 3.3 million in 2023 and is projected to remain at that level in 2024, before dropping to 2.6 million in 2025 and 1.8 million in 2026.

    Immigration, and particularly border crossings, is among the hottest topics in the run-up to the November presidential election. Chang suggested that other events could exacerbate the issue, particularly the unfolding situation in Haiti.

    However, she argued that in terms of net impact on the economy, immigration is “a good thing.”

    “From everything that we have seen, the revenues that are generated exceed the expenses. Now it is a political issue, not just here in the U.S. but you look at Europe, it’s also probably the No. 1 issue right now, but we do think that when you look at the unemployment numbers, the strength of consumption, the immigration was a big part of that,” Chang said.

    Vanguard economist says Fed to keep interest rates on hold for the rest of the year

    Other factors that have enabled the U.S. economy to outperform its peers include its high fiscal deficit and its energy independence, Chang added. Europe has struggled in recent years to eradicate its reliance on Russia for energy supply.

    Meanwhile, the Congressional Budget Office projects that the U.S. federal budget deficit totaled $1.4 trillion in 2023, or 5.3% of GDP, which will swell to 6.1% of GDP in 2024 and 2025.

    “I think that also in an election year you’re going to see a lot of spending before Sept. 30 as well, so there aren’t really many signs that those numbers [will subside]. I think that’s one reason why I do think that higher for longer will be here to stay,” Chang added. Sept. 30 is the end of the U.S. government’s fiscal year.

    With this in mind, JPMorgan sees only a “shallow” loosening cycle from the Federal Reserve, with inflationary pressures set to persist against the backdrop of high government spending and immigration.

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  • JPMorgan research boss explains how immigration is changing the U.S. economic outlook

    JPMorgan research boss explains how immigration is changing the U.S. economic outlook

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    Joyce Chang, chair of global research at JPMorgan, explains why the Wall Street giant is raising its U.S. economic growth forecasts, and discusses how immigration is affecting the outlook.

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  • HSBC is ‘very positive’ about the future of China’s economy, CFO says

    HSBC is ‘very positive’ about the future of China’s economy, CFO says

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    The Hong Kong observation wheel and the HSBC building in Victoria Harbour in Hong Kong.

    Ucg | Universal Images Group | Getty Images

    HSBC is “very positive” about the mid- to long-term outlook for the Chinese economy despite current headwinds, the British bank’s chief financial officer told CNBC.

    Growth in China has been weighed down over the past year by a slump in the country’s traditional economic pillars of real estate, infrastructure and exports. This prompted Beijing to ramp up its efforts to bolster manufacturing and domestic tech in a bid to modernize its economy and remain globally competitive.

    Speaking to CNBC’s Karen Tso on Wednesday, HSBC CFO Georges Elhedery said the lender — which is headquartered in London but does a lot of its business in Hong Kong and across the Asia-Pacific — was confident that the world’s second-largest economy would overcome its short-term headwinds.

    “We’re looking at major economic transition, which is taking place, which gives us very strong grounds to be very positive about the medium- and long-term outlook,” Elhedery said.

    He suggested that China’s economic maturity has reached such a stage that now is the “right time to transition into what more mature economies are.”

    Elhedery characterized this maturity as being more heavily reliant on consumers, the services industry and high-value and sustainability-driven products, such as electric vehicles and batteries, aspirations he said were evidenced by the Chinese government’s recent massive push toward these sectors.

    “That transition will mean that China will avoid falling in this middle income trap and be able to continue the growth pattern,” he added.

    “Some of the Western economies have gone through those transitions in the past, [and] China is going through a transition today. That gives us a lot of positive outlook for the medium- to long-term for China.”

    The more immediate economic challenges may last “a few quarters to a couple of years,” Elhedery said, but expressed confidence that China will be in a better position for the long run, as the country puts itself on a “materially better forward-looking track.”

    HSBC missed its full-year 2023 pretax profit forecasts on the back of a $3 billion write-down on its 19% stake in China’s Bank of Communications, while the lender cut its overall exposure to Chinese commercial real estate by $4.6 billion year on year.

    Yet, Elhedery on Thursday insisted that most of the challenges related to the ailing Chinese property market were “behind us,” even as he said the sector is not “out of the woods” so far.

    “We think the trough of that sector is behind us. We think in our case, our exposure and our ECL (expected credit losses) covers the bulk of the charges behind us, but that still means there will be lingering effects as the sector continues to adjust, and we may continue to see some impact but not to the tune that we’ve seen last year on our credit charges,” he said.

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  • Shareholder payouts hit a record $1.7 trillion last year as bank profits surged

    Shareholder payouts hit a record $1.7 trillion last year as bank profits surged

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    Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., March 5, 2024.

    Brendan Mcdermid | Reuters

    LONDON — Global dividend payouts to shareholders hit a record $1.66 trillion in 2023, according to a new report by British asset manager Janus Henderson.

    The Global Dividend Index report, published Wednesday, said payouts rose by 5% year-on-year on an underlying basis, with the fourth quarter showing a 7.2% rise from the previous three months.

    The underlying figure adjusts for the impact of exchange rates, one-off special dividends and technical factors related to dividend calendars, along with changes to the index.

    The banking sector contributed almost half of the world’s total dividend growth, delivering record payouts as high interest rates boosted lenders’ margins, the report found.

    Last year, major banks including JPMorgan Chase, Wells Fargo and Morgan Stanley announced plans to raise their quarterly dividends after clearing the Federal Reserve’s annual stress test, which dictates how much capital banks can return to shareholders.

    “In addition, lingering post-pandemic catch-up effects meant payouts were fully restored, most notably at HSBC,” Janus Henderson’s report added.

    “Emerging market banks made a particularly strong contribution to the increase, though those in China did not participate in the banking-sector’s dividend boom.”

    However, the positive impact from banking dividends was “almost entirely offset by cuts from the mining sector,” according to Janus Henderson.

    The report noted that large dividend cuts by some major companies such as BHP, Petrobras, Rio Tinto, Intel and AT&T diluted the global underlying growth rate for the year by two percentage points, masking significant broad-based growth in many parts of the world.

    ‘Key engine of growth’

    Around 86% of listed companies around the world either increased dividends or maintained them at current levels in 2023, Janus Henderson said.

    A total of 22 countries, including the U.S., France, Germany, Italy, Canada, Mexico and Indonesia, saw record payouts last year.

    Europe was described as a “key engine of growth,” with payouts rising 10.4% year-on-year on an underlying basis.

    For 2024, Janus Henderson expects total dividends to hit $1.72 trillion, equivalent to underlying growth of 5%.

    — CNBC’s Hugh Son contributed to this report.

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  • Stock market soars to record highs, fueled by AI optimism

    Stock market soars to record highs, fueled by AI optimism

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    Stock market soars to record highs, fueled by AI optimism – CBS News


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    The tech-centric Nasdaq is closing at a new high, driven by enthusiasm for artificial intelligence. This milestone marks its first record peak since 2021.

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  • JPMorgan CEO Jamie Dimon says AI is not just hype — ‘This is real’

    JPMorgan CEO Jamie Dimon says AI is not just hype — ‘This is real’

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    The burgeoning artificial intelligence tools from companies such as OpenAI still have their share of skeptics, but don’t count JPMorgan Chase CEO Jamie Dimon among them.

    The Wall Street titan told CNBC’s Leslie Picker on Monday that AI is not just a passing fad and is bigger than just the large language models such as Chat GPT. He compared the current moment favorably to the tech bubble around the start of the 21st century, when investor excitement seemingly got ahead of the actual changes.

    “This is not hype. This is real. When we had the internet bubble the first time around … that was hype. This is not hype. It’s real,” Dimon said. “People are deploying it at different speeds, but it will handle a tremendous amount of stuff.”

    JPMorgan has done work on the ability to use the new technologies internally, with Dimon saying that AI will eventually “be used in almost every job.” JPMorgan created a new role of chief data and analytics officer last year, in part to handle AI.

    Dimon said Monday that there are 200 people at JPMorgan doing research on the large language models that have recently been rolled out by tech companies.

    While acknowledging that AI can be used by bad actors, Dimon called himself a “big optimist” about the emerging technology, mentioning cybersecurity and pharmaceutical research as areas where it can be helpful.

    “It may invent cancer cures because it can do things that the human mind simply cannot do,” Dimon said.

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