Wall Street is back
(JPMorgan CEO Jamie Dimon.Getty/Mark Wilson)
Wall Street banks kicked off fourth-quarter earnings on Friday, and the tone was pretty optimistic.
Two of the largest banks in the US, JPMorgan and Bank of America, beat analyst expectations, and JPMorgan beat on revenue expectations as well.
But the brightest spot was the firms' — and their CEOs' — commentary on the outlook for 2017.
"With strong leadership positions in our businesses against a backdrop of rising interest rates, we are well-positioned to continue to grow and deliver for our shareholders in 2017," Bank of America CEO Brian Moynihan said in a statement.
His CFO, Paul Donofrio, referred to the December 2016 rise in interest rates and said, "We expect to see a significant increase in net interest income in the first quarter of 2017."
The bank said it is expecting its net interest income to increase by about $600 million in the first quarter of 2017, "assuming rates remain at current levels and modest growth in loans and deposits."
Bank of America is also increasing its buyback program for the first half of the year to $4.3 billion from $2.5 billion.
Over at JPMorgan, CEO Jamie Dimon was candidly bullish on the US economy.
"The US economy may be building momentum," he said in a statement. "Looking ahead, there is opportunity for good, rational, and thoughtful policy decisions to be implemented, which would spur growth, create jobs for Americans across the income spectrum, and help communities, and we are well-positioned to play our part."
In a presentation, his firm also said it expects net interest income to be up modestly in the first quarter because of interest rate increases.
JPMorgan's share price hit an all-time high shortly after the bank published results.
Meanwhile, the business that had for years been killing Wall Street banks continued to bounce back. Both firms saw continued pickups in fixed income, currencies, and commodities trading revenues. At JPMorgan, FICC revenues were up 12% from the year-ago quarter, helping the bank post record fourth-quarter markets revenues.
BAML's FICC revenues increased 31%.
Bank stocks have also seen a massive postelection rally. The SPDR S&P Bank ETF is up 24% since Donald Trump's election win largely because of expectations that his administration will reduce financial regulations and boost dealmaking and economic activity.
In other words, it looks as though there are good things to come for Wall Street banks.
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