US banks exceed expectations | Financial Times

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Good evening. With Darren on holiday, I am with you for Disrupted Times today.

It’s been a big day in banking. Since the collapse of Silicon Valley Bank last month, there seems to be little consensus over whether the ensuing financial turmoil in the US and across Europe is waning or a taste of more to come.

This morning, some of the biggest US banks reported their first-quarter profits, and JPMorgan, Citigroup and Wells Fargo have confounded pessimistic expectations.

JPMorgan Chase’s net income rose 52 per cent year-on-year in the first quarter, gaining $37bn in deposits following SVB’s collapse. The bank exceeded analysts’ estimates for quarterly net income, according to consensus data compiled by Bloomberg.

Strong consumer spending and corporate activity drove profits for Citigroup in the first three months of this year. Net income rose to $4.6bn, or $2.19 per share. That was a marked improvement on analysts’ forecasts. Citi’s profits were bolstered by planned sales including an India-based consumer banking business.

At Wells Fargo, sales increased 17.8 per cent to $30.7bn during the first three months of 2023. However, deposits have fallen slightly and are down 7 per cent from last year.

BlackRock, the world’s biggest money manager, also reported earnings today — but it didn’t fare as well. The group’s quarterly net income fell by nearly a fifth. Net income fell 19 per cent year-on-year to $1.1bn as it struggled to weather the industry fallout following last month’s banking turmoil.

Need to know: UK and Europe economy

European stocks responded optimistically to US economic data, as fears of further Federal Reserve interest rate hikes receded.

However, the UK outlook is less optimistic, with Britain’s goods exports having fallen behind all other G7 countries. Quarterly figures released from the Office for National Statistics last month demonstrated that in the final quarter of 2022, UK export volumes were more than 9 per cent below the 2019 pre-pandemic average.

While other countries’ employment rates have recovered from pandemic-induced recessions, the UK looks slow to catch up, says John Burn-Murdoch, the FT’s chief data reporter.

Economics editor Chris Giles writes that while the UK sees signs of the slowdown that the Bank of England believes is necessary to reduce inflation, the data may not be sufficient to convince the central bank to pause interest rate rises.

Need to know: Global economy

A fall in US producer prices have fuelled investor hopes that the Federal Reserve might wrap up its rate hiking campaign. However, top Fed official Christopher Waller says there’s still more work to do to bring inflation under control.

Ghana is in the spotlight in our latest story in our series on distressed countries. The conditions the IMF has imposed on the African nation since it defaulted on its debts last December have opened “a can of worms”, said Thys Louw, emerging market debt portfolio manager at investment company Ninety One.

In Singapore, the world’s biggest banks have been asked to avoid discussing the origins of wealth flowing into the Asian financial hub as the billions coming into the city-state from rich Chinese has become a politically sensitive issue.

Need to know: business

London-listed gambling group 888 has reinstated Middle Eastern client accounts after failures to correctly follow anti-money laundering processes earlier this year.

A production issue is set to damage Boeing’s ability to deliver 737 Max jets, potentially exacerbating global aircraft shortages that are already causing headaches for customers.

Glencore has held on tightly to its coal business while other mining companies including Rio Tinto and BHP have moved on. But now it wants to spin off coal, as part of its $23bn hostile takeover bid for Teck Resources.

American business magnate Larry Ellison’s stealth takeover of Oracle demonstrates that old tactics by “tech dinosaurs” still work, writes the FT’s west coast editor Richard Waters.

Corporate filings reveal that billionaire brothers Mohsin and Zuber Issa, who own one of the world’s biggest petrol station businesses EG, bought the £6.8bn supermarket chain Asda for just £200mn.

Science round-up

Health authorities in Ghana have granted a new malaria vaccine developed at Oxford university’s Jenner Institute its first regulatory approval. Director Adrian Hill said the approval marked the “culmination of 30 years of malaria vaccine research”.

A UK review argues that moving clinical trials from overwhelmed hospitals to “pop-up” locations could boost the number of trials. This is in response to a nearly 41 per cent fall in industry clinical trials since 2017.

British scientists have released research mapping the genetic evolution of lung cancer cells, which allows them to predict the cells’ future behaviour.

A detection tool has been developed by academic publishers to spot academic essays written by “paper mills” as the industry attempts to clamp down on fake research studies.

In the final episode of Tech Tonic’s series on quantum technology, the FT’s Madhumita Murgia speaks to Nobel Prize winner Anton Zeilinger about the potential for teleportation.

Intel, once the global leader in semiconductor manufacturing, is fighting to prove it can become the chip champion the US needs as it aims to win financial backing from the Biden administration.

Some good news

In some good news for the weekend, a cross-sectional study of 1,123 participants has found a highly accurate technique for identifying Parkinson’s disease, according to research published in The Lancet Neurology journal. The technique detects at-risk patients and may be an early indicator of the patient developing the disease at a later date.