One-Time Costs Worsened the Results of Major US Banks

Bank of America and Citigroup faced significant challenges in the final quarter of last year, leading to diminished business performance. In contrast, despite overall weaker market conditions, Wells Fargo reported increased profits this year. International sources attribute these setbacks to one-time expenses related to the collapse of certain American banks in the previous year.

In the last quarter of 2023, Bank of America’s net profit was $3.1 billion, a stark decrease from $7.1 billion in the same period a year earlier. This decline in profits is primarily due to one-time costs associated with the collapse of Silicon Valley Bank and Signature Bank. BoA contributed $2.1 billion to the Federal Deposit Insurance Corporation (FDIC) as part of a broader industry effort to stabilize the banking sector. Revenues also decreased by ten per cent to $22.1 billion.

A Closer Look at Recent Financial Performances

Citigroup reported a loss of $1.8 billion in the last quarter of 2023, a significant downturn compared to the same period the previous year. This resulted in a $4.66 billion payment to the FDIC. Citigroup’s revenues fell by approximately seven per cent to $17.44 billion. The bank announced a restructuring plan, including cutting 20,000 jobs by 2026, to enhance profitability.

Wells Fargo, however, showed encouraging results. The bank’s net profit rose from $3.16 billion to $3.45 billion in the last quarter of 2023. Revenues increased from $20.3 billion to $20.48 billion. Wells Fargo also made a payment of $1.9 billion to the FDIC. Despite these positive results, the bank expressed caution about the current year, anticipating challenges depending on future interest rate movements, which are expected to decrease in the coming months.

JPMorgan Chase, the largest American bank by total assets, posted a net profit of $9.3 billion in the last quarter of 2023. This figure represents a 15 per cent decrease from the previous quarter. On a positive note, the bank’s revenues increased by 12 per cent to $38.6 billion during the same quarter.