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CNBC's Leslie Picker reports on the bank's quarterly earnings results.
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Tag: Wells Fargo & Co
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JPMorgan Chase is set to report third-quarter earnings – here’s what the Street expects
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CEO of Chase Jamie Dimon looks on as he attends the seventh “Choose France Summit”, aiming to attract foreign investors to the country, at the Chateau de Versailles, outside Paris, on May 13, 2024.
Lucovic Marin | Getty Images
JPMorgan Chase is scheduled to report third-quarter earnings before the opening bell Friday.
Here’s what Wall Street expects:
- Earnings: $4.01 a share, according to LSEG
- Revenue: $41.63 billion, according to LSEG
- Net interest income: $22.73 billion, according to StreetAccount
- Trading Revenue: Fixed income of $4.38 billion, Equities of $2.41 billion, according to StreetAccount
JPMorgan will be watched closely for clues on how banks are faring at the start of the Federal Reserve’s easing cycle.
The biggest American bank has thrived in a rising rate environment, posting record net income figures since the Fed started hiking rates in 2022.
Now, with the Fed cutting rates, there are questions as to how JPMorgan will navigate the change. Like other big banks, it’s margins may be squeezed as yields on interest-generating assets like loans fall faster than its funding costs.
Last month, JPMorgan dialed back expectations for 2025 net interest income and expenses, and analysts will want more details on those projections.
Analysts will also want to hear JPMorgan CEO Jamie Dimon’s thoughts about the upcoming U.S. election and the industry’s efforts to push back against an array of regulatory moves to rein in fees and force banks to hold more capital.
Shares of JPMorgan have jumped 25% this year, exceeding the 20% gain of the KBW Bank Index.
Wells Fargo is scheduled to release results later Friday, while Bank of America, Goldman Sachs, Citigroup and Morgan Stanley report next week.
This story is developing. Please check back for updates.
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An analyst upgraded Morgan Stanley to a buy. Why we’re not ready to follow suit
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Bing Guan | Bloomberg | Getty Images
Newfound optimism on Morgan Stanley helped its stock close Friday’s session at its highest level of the year. Jim Cramer is still unsure what the Club’s next move should be.
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What a resurgence in Wall Street dealmaking means for Morgan Stanley and Wells Fargo
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Federal Reserve Chairman Jerome Powell speaks during a news conference following the September meeting of the Federal Open Market Committee at the William McChesney Martin Jr. Federal Reserve Board Building on September 18, 2024 in Washington, DC.
Anna Moneymaker | Getty Images
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Why JPMorgan Chase is prepared to sue the U.S. government over Zelle scams
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JPMorgan Chase CEO and Chairman Jamie Dimon gestures as he speaks during the U.S. Senate Banking, Housing and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill in Washington, D.C., on Dec. 6, 2023.
Evelyn Hockstein | Reuters
Buried in a roughly 200-page quarterly filing from JPMorgan Chase last month were eight words that underscore how contentious the bank’s relationship with the government has become.
The lender disclosed that the Consumer Financial Protection Bureau could punish JPMorgan for its role in Zelle, the giant peer-to-peer digital payments network. The bank is accused of failing to kick criminal accounts off its platform and failing to compensate some scam victims, according to people who declined to be identified speaking about an ongoing investigation.
In response, JPMorgan issued a thinly veiled threat: “The firm is evaluating next steps, including litigation.”
The prospect of a bank suing its regulator would’ve been unheard of in an earlier era, according to policy experts, mostly because corporations used to fear provoking their overseers. That was especially the case for the American banking industry, which needed hundreds of billions of dollars in taxpayer bailouts to survive after irresponsible lending and trading activities caused the 2008 financial crisis, those experts say.
But a combination of factors in the intervening years has created an environment where banks and their regulators have never been farther apart.
Trade groups say that in the aftermath of the financial crisis, banks became easy targets for populist attacks from Democrat-led regulatory agencies. Those on the side of regulators point out that banks and their lobbyists increasingly lean on courts in Republican-dominated districts to fend off reform and protect billions of dollars in fees at the expense of consumers.
“If you go back 15 or 20 years, the view was it’s not particularly smart to antagonize your regulator, that litigating all this stuff is just kicking the hornet’s nest,” said Tobin Marcus, head of U.S. policy at Wolfe Research.
“The disparity between how ambitious [President Joe] Biden’s regulators have been and how conservative the courts are, at least a subset of the courts, is historically wide,” Marcus said. “That’s created so many opportunities for successful industry litigation against regulatory proposals.”
Assault on fees
Those forces collided this year, which started out as one of the most consequential for bank regulation since the post-2008 reforms that curbed Wall Street risk-taking, introduced annual stress tests and created the industry’s lead antagonist, the CFPB.
In the final months of the Biden administration, efforts from a half-dozen government agencies were meant to slash fees on credit card late payments, debit transactions and overdrafts, among other proposals. The industry’s biggest threat was the Basel Endgame, a sweeping plan to force big banks to hold tens of billions of dollars more in capital for activities like trading and lending.
“The industry is facing an onslaught of regulatory and potential legislative change,” Marianne Lake, head of JPMorgan’s consumer bank, warned investors in May.
JPMorgan’s disclosure about the CFPB probe into Zelle comes after years of grilling by Democrat lawmakers over financial crimes on the platform. Zelle was launched in 2017 by a bank-owned firm called Early Warning Services in response to the threat from peer-to-peer networks including PayPal.
The vast majority of Zelle activity is uneventful; of the $806 billion that flowed across the network last year, only $166 million in transactions was disputed as fraud by customers of JPMorgan, Bank of America and Wells Fargo, the three biggest players on the platform.
But the three banks collectively reimbursed just 38% of those claims, according to a July Senate report that looked at disputed unauthorized transactions.
Banks are typically on the hook to reimburse fraudulent Zelle payments that the customer didn’t give permission for, but usually don’t refund losses if the customer is duped into authorizing the payment by a scammer, according to the Electronic Fund Transfer Act.
A JPMorgan payments executive told lawmakers in July that the bank actually reimburses 100% of unauthorized transactions; the discrepancy in the Senate report’s findings is because bank personnel often determine that customers have authorized the transactions.
Amid the scrutiny, the bank began warning Zelle users on the Chase app to “Stay safe from scams” and added disclosures that customers won’t likely be refunded for bogus transactions.
JPMorgan declined to comment for this article.
Dimon in front
The company, which has grown to become the largest and most profitable American bank in history under CEO Jamie Dimon, is at the fore of several other skirmishes with regulators.
Thanks to his reputation guiding JPMorgan through the 2008 crisis and last year’s regional banking upheaval, Dimon may be one of few CEOs with the standing to openly criticize regulators. That was highlighted this year when Dimon led a campaign, both public and behind closed doors, to weaken the Basel proposal.
In May, at JPMorgan’s investor day, Dimon’s deputies made the case that Basel and other regulations would end up harming consumers instead of protecting them.
The cumulative effect of pending regulation would boost the cost of mortgages by at least $500 a year and credit card rates by 2%; it would also force banks to charge two-thirds of consumers for checking accounts, according to JPMorgan.
The message: banks won’t just eat the extra costs from regulation, but instead pass them on to consumers.
While all of these battles are ongoing, the financial industry has racked up several victories so far.
Some contend the threat of litigation helped convince the Federal Reserve to offer a new Basel Endgame proposal this month that roughly cuts in half the extra capital that the largest institutions would be forced to hold, among other industry-friendly changes.
It’s not even clear if the watered-down version of the proposal, a long-in-the-making response to the 2008 crisis, will ever be implemented because it won’t be finalized until well after U.S. elections.
If Republican candidate Donald Trump wins, the rules might be further weakened or killed outright, and even under a Kamala Harris administration, the industry could fight the regulation in court.
That’s been banks’ approach to the CFPB credit card rule, which aimed to cap late fees at $8 per incident and was set to go into effect in May.
A last-ditch effort from the U.S. Chamber of Commerce and bank trade groups successfully delayed its implementation when Judge Mark Pittman of the Northern District of Texas sided with the industry, granting a freeze of the rule.
‘Venue shopping’
A key playbook for banks has been to file cases in conservative jurisdictions where they are likely to prevail, according to Lori Yue, a Columbia Business School associate professor who has studied the interplay between corporations and the judicial system.
The Northern District of Texas feeds into the 5th Circuit Court of Appeals, which is “well-known for its friendliness to industry lawsuits against regulators,” Yue said.
“Venue-shopping like this has become well-established corporate strategy,” Yue said. “The financial industry has been particularly active this year in suing regulators.”
Since 2017, nearly two-thirds of the lawsuits filed by the U.S. Chamber of Commerce challenging federal regulations have been in courts under the 5th Circuit, according to an analysis by Accountable US.
Industries dominated by a few large players — from banks to airlines, pharmaceutical companies and energy firms — tend to have well-funded trade organizations that are more likely to resist regulators, Yue added.
The polarized environment, where weakened federal agencies are undermined by conservative courts, ultimately preserves the advantages of the largest corporations, according to Brian Graham, co-founder of bank consulting firm Klaros.
“It’s really bad in the long run, because it locks in place whatever the regulations have been, while the reality is that the world is changing,” Graham said. “It’s what happens when you can’t adopt new regulations because you’re terrified that you’ll get sued.”
— With data visualizations by CNBC’s Gabriel Cortes.
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Here’s what Morgan Stanley, Wells Fargo stand to gain from lower interest rates
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Federal Reserve Bank Chair Jerome Powell announces that interest rates will remain unchanged during a news conference at the bank’s William McChesney Martin building on May 01, 2024 in Washington, DC.
Chip Somodevilla | Getty Images
Big Wall Street banks and interest rates have a complicated relationship.
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How investors should play Wells Fargo stock after newly announced regulatory action
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A person walks past the entrance to a Wells Fargo bank branch on Amsterdam Avenue on June 25, 2024, in New York City.
Gary Hershorn | Corbis News | Getty Images
Wells Fargo’s latest regulatory hiccup isn’t a doomsday scenario.
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Wells Fargo cannot expand into certain high risk areas without permission, regulator says
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CNBC’s Kate Rooney joins ‘Power Lunch’ to discuss the Office of the Comptroller of the Currency issuing an enforcement action against Wells Fargo due to deficiencies in its risk management practices.
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Bank stock woes hold back the overall market, but Starbucks’ new CEO is full steam ahead
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Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.
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3 ways Wall Street’s largest banks are leveraging AI to increase profitability
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Pedestrians walk along Wall Street near the New York Stock Exchange (NYSE) in New York, US, on Tuesday, Aug. 27, 2024.
Bloomberg | Bloomberg | Getty Images
Big banks are jumping headfirst into the AI race.
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5 top money moves to consider before the Federal Reserve’s first rate cut since 2020
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Last week, Federal Reserve Chair Jerome Powell all but confirmed that an interest rate cut is coming soon.
“The time has come for policy to adjust,” the central bank leader said in his keynote address at the Fed’s annual retreat in Jackson Hole, Wyoming.
For Americans struggling to keep up with sky-high interest charges, a likely quarter-point cut in September may bring some welcome relief — especially with the right preparation. (A more aggressive half-point move has a roughly a 1-in-3 chance of happening, according to the CME’s FedWatch measure of futures market pricing.)
“If you are a consumer, now is the time to say: ‘What does my spending look like? Where would my money grow the most and what options do I have?’” said Leslie Tayne, an attorney specializing in debt relief at Tayne Law in New York and author of “Life & Debt.”
More from Personal Finance:
How investors can prepare for lower interest rates
More Americans are struggling even as inflation cools
Some colleges is now cost nearly $100,000 a yearCurrently, the federal funds rate is at the highest level in two decades, in a range of 5.25% to 5.50%.
If the Fed cuts rates in September, as expected, it would mark the first time officials lowered its benchmark in more than four years, when they slashed them to near zero at the beginning of the Covid-19 pandemic.
“From a consumer perspective, it’s important to note that lower interest rates will be a gradual process,” said Ted Rossman, senior industry analyst at Bankrate.com. “The trip down is likely to be much slower than the series of interest rate hikes which quickly pushed the federal funds rate higher by 5.25 percentage points in 2022 and 2023.”
Here are five ways to prepare for this policy shift:
1. Strategize paying down credit card debt
People shop at a store in Brooklyn on August 14, 2024 in New York City.
Spencer Platt | Getty Images
With a rate cut, the prime rate lowers, too, and the interest rates on variable-rate debt — most notably credit cards — are likely to follow, reducing your monthly payments. But even then, APRs will only ease off extremely high levels.
For example, the average interest rate on a new credit card today is nearly 25%, according to LendingTree data. At that rate, if you pay $250 per month on a card with a $5,000 balance, it will cost you more than $1,500 in interest and take 27 months to pay off.
If the central bank cuts rates by a quarter point, you’ll save $21 altogether and be able to pay off the balance one month faster. “That’s not nothing, but it is far less than what you could save with a 0% balance transfer credit card,” said Matt Schulz, chief credit analyst at LendingTree.
Rather than wait for a small adjustment in the months ahead, borrowers could switch now to a zero-interest balance transfer credit card or consolidate and pay off high-interest credit cards with a lower-rate personal loan, Tayne said.
2. Lock in a high-yield savings rate
Since rates on online savings accounts, money market accounts and certificates of deposit are all poised to go down, experts say this is the time to lock in some of the highest returns in decades.
For now, top-yielding online savings accounts are paying more than 5% — well above the rate of inflation.
Although those rates will fall once the central bank lowers its benchmark, a typical saver with about $8,000 in a checking or savings account could earn an additional $200 a year by moving that money into a high-yield account that earns an interest rate of 2.5% or more, according to a recent survey by Santander Bank in June. The majority of Americans keep their savings in traditional accounts, Santander found, which FDIC data shows are currently paying 0.46%, on average.
Alternatively, “now is a great time to lock in the most competitive CD yields at a level that is well ahead of targeted inflation,” said Greg McBride, Bankrate’s chief financial analyst. “There is no sense in holding out for better returns later.”
Currently, a top-yielding one-year CD pays more than 5.3%, according to Bankrate, as good as a high-yield savings account.
3. Consider the right time to finance a big purchase
If you’re planning a major purchase, like a home or car, then it may pay to wait, since lower interest rates could reduce the cost of financing down the road.
“Timing your purchase to coincide with lower rates can save money over the life of the loan,” Tayne said.
Although mortgage rates are fixed and tied to Treasury yields and the economy, they’ve already started to come down from recent highs, largely due to the prospect of a Fed-induced economic slowdown. The average rate for a 30-year, fixed-rate mortgage is now just under 6.5%, according to Freddie Mac.
Compared with a recent high of 7.22% in May, today’s lower rate on a $350,000 loan would result in a savings of $171 a month, or $2,052 a year and $61,560 over the lifetime of the loan, according to calculations by Jacob Channel, senior economic analyst at LendingTree.
However, going forward, lower mortgage rates could also boost homebuying demand, which would push prices higher, McBride said. “If lower mortgage rates lead to a surge in prices, that’s going to offset the affordability benefit for would-be buyers.”
What exactly will happen in the housing market “is up in the air” depending on how much mortgage rates decline in the latter half of the year and the level of supply, according to Channel.
“Timing the market is virtually impossible,” he said.
4. Assess the right time to refinance
For those struggling with existing debt, there may be more options for refinancing once rates drop.
Private student loans, for example, tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means once the Fed starts cutting interest rates, the rates on those private student loans will come down as well.
Eventually, borrowers with existing variable-rate private student loans may also be able to refinance into a less-expensive fixed-rate loan, according to higher education expert Mark Kantrowitz.
Currently, the fixed rates on a private refinance are as low as 5% and as high as 11%, he said.
However, refinancing a federal loan into a private student loan will forgo the safety nets that come with federal loans, he added, “such as deferments, forbearances, income-driven repayment and loan forgiveness and discharge options.” Additionally, extending the term of the loan means you ultimately will pay more interest on the balance.
Be mindful of potential loan-term extensions, cautioned David Peters, founder of Peters Professional Education in Richmond, Virginia. “Consider maintaining your original payment after refinancing to shave as much principal off as possible without changing your out-of-pocket cash flow,” he said.
Similar considerations may also apply for home and auto loan refinancing opportunities, depending in part on your existing rate.
5. Perfect your credit score
Those with better credit could already qualify for a lower interest rate.
When it comes to auto loans, for instance, there’s no question inflation has hit financing costs — and vehicle prices — hard. The average rate on a five-year new car loan is now nearly 8%, according to Bankrate.
But in this case, “the financing is one variable, and it’s frankly one of the smaller variables,” McBride said. For example, a reduction of a quarter percentage point in rates on a $35,000, five-year loan is $4 a month, he calculated.
Here, and in many other situations, as well, consumers would benefit more from paying down revolving debt and improving their credit scores, which could pave the way to even better loan terms, McBride said.
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How to position yourself to benefit from the Fed’s first rate cut in years, according to financial experts
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The Federal Reserve could start lowering interest rates as soon as next month, based on the latest inflation data.
“We think that the time is approaching,” Fed Chair Jerome Powell said at a press conference after the last Federal Open Market Committee meeting in July.
For Americans struggling to keep up with sky-high interest charges, a likely September rate cut may bring some welcome relief — even more so with the right planning.
“If you are a consumer, now is the time to say: ‘What does my spending look like? Where would my money grow the most and what options do I have?’” said Leslie Tayne, an attorney specializing in debt relief at Tayne Law in New York and author of “Life & Debt.”
More from Personal Finance:
‘Emotion-proof’ your portfolio ahead of the election
‘Recession pop’ is in: How music hits on economic trends
More Americans are struggling even as inflation coolsFed officials signaled they expect to reduce the benchmark rate once in 2024 and four times in 2025.
That could bring the benchmark fed funds rate from the current range of 5.25% to 5.50% to below 4% by the end of next year, according to some experts.
The federal funds rate is the one at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the rates they see every day on things such as private student loans and credit cards.
Here are five ways to position your finances for the months ahead:
1. Lock in a high-yield savings rate
Since rates on online savings accounts, money market accounts and certificates of deposit are all poised to go down, experts say this is the time to lock in some of the highest returns in decades.
For now, top-yielding online savings accounts are paying more than 5% — well above the rate of inflation.
Although those rates will fall once the central bank lowers its benchmark, a typical saver with about $8,000 in a checking or savings account could earn an additional $200 a year by moving that money into a high-yield account that earns an interest rate of 2.5% or more, according to a recent survey by Santander Bank in June. The majority of Americans keep their savings in traditional accounts, Santander found, which FDIC data shows are currently paying 0.45%, on average.
Alternatively, “now is a great time to lock in the most competitive CD yields at a level that is well ahead of targeted inflation,” said Greg McBride, chief financial analyst at Bankrate.com. “There is no sense in holding out for better returns later.”
Currently, a top-yielding one-year CD pays more than 5.3%, according to Bankrate, as good as a high-yield savings account.
2. Pay down credit card debt
With a rate cut, the prime rate lowers, too, and the interest rates on variable-rate debt — most notably credit cards — are likely to follow, reducing your monthly payments. But even then, APRs will only ease off extremely high levels.
For example, the average interest rate on a new credit card today is nearly 25%, according to LendingTree data. At that rate, if you pay $250 per month on a card with a $5,000 balance, it will cost you more than $1,500 in interest and take 27 months to pay off.
If the central bank cuts rates by a quarter point, you’ll save $21 and be able to pay off the balance one month faster. “That’s not nothing, but it is far less than what you could save with a 0% balance transfer credit card,” said Matt Schulz, chief credit analyst at LendingTree.
Rather than wait for a small adjustment in the months ahead, borrowers could switch now to a zero-interest balance transfer credit card or consolidate and pay off high-interest credit cards with a personal loan, Tayne said.
3. Consider the right time to finance a big purchase
If you’re planning a major purchase, like a home or car, then it may pay to wait, since lower interest rates could reduce the cost of financing down the road.
“Timing your purchase to coincide with lower rates can save money over the life of the loan,” Tayne said.
Although mortgage rates are fixed and tied to Treasury yields and the economy, they’ve already started to come down from recent highs, largely due to the prospect of a Fed-induced economic slowdown. The average rate for a 30-year, fixed-rate mortgage is now around 6.5%, according to Freddie Mac.
Compared to a recent high of 7.22% in May, today’s lower rate on a $350,000 loan would result in a savings of $171 a month, or $2,052 a year and $61,560 over the lifetime of the loan, according to calculations by Jacob Channel, senior economic analyst at LendingTree.
However, going forward, lower mortgage rates could also boost homebuying demand, which would push prices higher, McBride said. “If lower mortgage rates lead to a surge in prices, that’s going to offset the affordability benefit for would-be buyers.”
What exactly will happen in the housing market “is up in the air” depending on how much mortgage rates decline in the latter half of the year and the level of supply, according to Channel.
“Timing the market is virtually impossible,” he said.
4. Consider the right time to refinance
For those struggling with existing debt, there may be more options for refinancing once rates drop.
Private student loans, for example, tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means once the Fed starts cutting interest rates, the rates on those private student loans will come down as well.
Eventually, borrowers with existing variable-rate private student loans may also be able to refinance into a less expensive fixed-rate loan, according to higher education expert Mark Kantrowitz.
Currently, the fixed rates on a private refinance are as low as 5% and as high as 11%, he said.
However, refinancing a federal loan into a private student loan will forgo the safety nets that come with federal loans, he added, “such as deferments, forbearances, income-driven repayment and loan forgiveness and discharge options.” Additionally, extending the term of the loan means you ultimately will pay more interest on the balance.
Be mindful of potential loan -term extensions, cautioned David Peters, founder of Peters Professional Education in Richmond, Virginia. “Consider maintaining your original payment after refinancing to shave as much principal off as possible without changing your out-of-pocket cash flow,” he said.
Similar considerations may also apply for home and auto loan refinancing opportunities, depending in part on your existing rate.
5. Perfect your credit score
Those with better credit could already qualify for a lower interest rate.
When it comes to auto loans, for instance, there’s no question inflation has hit financing costs — and vehicle prices — hard. The average rate on a five-year new car loan is now nearly 8%, according to Bankrate.
But in this case, “the financing is one variable, and it’s frankly one of the smaller variables,” McBride said. For example, a reduction of a quarter percentage point in rates on a $35,000, five-year loan is $4 a month, he calculated.
Here, and in many other situations, as well, consumers would benefit more from paying down revolving debt and improving their credit scores, which could pave the way to even better loan terms, McBride said.
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JPMorgan Chase is opening more small-town branches in middle America
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Three years ago, JPMorgan Chase became the first bank with a branch in all 48 contiguous states. Now, the firm is expanding, with the aim of reaching more Americans in smaller cities and towns.
JPMorgan recently announced a new goal within its multibillion-dollar branch expansion plan that ensures coverage is within an “accessible drive time” for half the population in the lower 48 states. That requires new locations in areas that are less densely populated — a focus for Chairman and CEO Jamie Dimon as he embarks on his 14th annual bus tour Monday.
Dimon’s first stop is in Iowa, where the bank plans to open 25 more branches by 2030.
“From promoting community development to helping small businesses and teaching financial management skills and tools, we strive to extend the full force of the firm to all of the communities we serve,” Dimon said in a statement.
He will also travel to Minnesota, Nebraska, Missouri, Kansas and Arkansas this week. Across those six states, the bank has plans to open more than 125 new branches, according to Jennifer Roberts, CEO of Chase Consumer Banking.
“We’re still at very low single-digit branch share, and we know that in order for us to really optimize our investment in these communities, we need to be at a higher branch share,” Roberts said in an interview with CNBC. Roberts is traveling alongside Dimon across the Midwest for the bus tour.
Roberts said the goal is to reach “optimal branch share,” which in some newer markets amounts to “more than double” current levels.
At the bank’s investor day in May, Roberts said that the firm was targeting 15% deposit share and that extending the reach of bank branches is a key part of that strategy. She said 80 of the firm’s 220 basis points of deposit-share gain between 2019 and 2023 were from branches less than a decade old. In other words, almost 40% of those deposit share gains can be linked to investments in new physical branches.
In expanding its brick-and-mortar footprint, JPMorgan is bucking the broader banking industry trend of shuttering branches. Higher-for-longer interest rates have created industrywide headwinds due to funding costs, and banks have opted to reduce their branch footprint to offset some of the macro pressures.
In the first quarter, the U.S. banking industry recorded 229 net branch closings, compared with just 59 in the previous quarter, according to S&P Global Market Intelligence data. Wells Fargo and Bank of America closed the highest net number of branches, while JPMorgan was the most active net opener.
According to FDIC research collated by KBW, growth in bank branches peaked right before the financial crisis, in 2007. KBW said this was due, in part, to banks assessing their own efficiencies and shuttering underperforming locations, as well as technological advances that allowed for online banking and remote deposit capture. This secular reckoning was exacerbated during the pandemic, when banks reported little change to operating capacity even when physical branches were closed temporarily, the report said.
But JPMorgan, the nation’s largest lender, raked in a record $50 billion in profit in 2023 – the most ever for a U.S. bank. As a result, the firm is in a unique position to spend on brick-and-mortar, while others are opting to be more prudent.
When it comes to prioritizing locations for new branches, Roberts said it’s a “balance of art and science.” She said the bank looks at factors such as population growth, the number of small businesses in the community, whether there is a new corporate headquarters, a new suburb being built, or new roadways.
And even in smaller cities, foot traffic is a critical ingredient.
“I always joke and say, if there’s a Chick-fil-A there, we want to be there, too,” Roberts said. “Because Chick-fil-A’s, no matter where they go, are always successful and busy.”
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Morgan Stanley tells wealth advisors they can pitch bitcoin ETFs in a first for a big bank
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Morgan Stanley on Friday told its army of financial advisors that it will soon allow them to offer bitcoin ETFs to some clients, a first among major Wall Street banks, CNBC has learned.
The firm’s 15,000 or so financial advisors can solicit eligible clients to purchase shares of two exchange-traded bitcoin funds starting Wednesday, according to people with knowledge of the policy.
Those funds are BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund, the people said.
The move from Morgan Stanley, one of the world’s largest wealth management firms, is the latest sign of the adoption of bitcoin by mainstream finance. In January, the U.S. Securities and Exchange Commission approved applications for 11 spot bitcoin ETFs, heralding the arrival of an investment vehicle for bitcoin that is easier to access, cheaper to own and more readily traded.
Bitcoin has weathered market sell-offs, the spectacular collapse of crypto exchange FTX and criticism from the most established figures in finance including JPMorgan Chase CEO Jamie Dimon and Berkshire Hathaway CEO Warren Buffett.
So it’s not surprising that Wall Street’s major wealth management businesses didn’t immediately embrace the new ETFs, forbidding their financial advisors from pitching them and only allowing trades if clients actively sought out the product.
Goldman Sachs, JPMorgan, Bank of America and Wells Fargo still follow that policy, according to spokespeople at the four banks.
‘Aggressive’ tolerance
Morgan Stanley made the move in response to demand from clients and in an attempt to follow an evolving marketplace for digital assets, said the people, who declined to be identified speaking about the bank’s internal policies.
The bank is still striking a note of caution, however, in the rollout: Only clients with a net worth of at least $1.5 million, an aggressive risk tolerance and the desire to make speculative investments are suitable for bitcoin ETF solicitation, said the people. The investments are for taxable brokerage accounts, not retirement accounts, they added.
The bank will monitor clients’ crypto holdings to make sure they don’t end up with excessive exposure to the volatile asset class, according to the sources.
The only crypto investments approved for solicited purchase at Morgan Stanley are the pair of bitcoin ETFs from BlackRock and Fidelity; private funds from Galaxy and FS NYDIG that the bank made available starting in 2021 were phased out earlier this year.
Morgan Stanley is watching how the market for newly approved ether ETFs develops and hasn’t committed to whether it would provide access to those, the people said.
Correction: Private funds from Galaxy and FS NYDIG that Morgan Stanley made available starting in 2021 were phased out earlier this year. An earlier version of this story included inaccurate information from Morgan Stanley sources about the company’s crypto investment offerings.
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Lost in the market’s sharp rotation out of tech stocks is a really bullish call on major banks
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Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.
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Investment banking is back — and the recovery is just getting started
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A combination file photo shows Wells Fargo, Citibank, Morgan Stanley, JPMorgan Chase, Bank of America and Goldman Sachs.
Reuters
Investment banking was the rock star of big bank earnings this season.
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