Earnings Performance

• Net profit situation: Citigroup's net profit increased more than expected year-on-year. JPMorgan Chase and Wells Fargo both experienced a year-on-year decline in net profit after deducting one-time items.
• Stock price response: After the report was released, JPMorgan Chase's stock price fell 1.2%, Citigroup fell 1.8%, and Wells Fargo fell 6%, becoming the company with the largest decline in the S&P 500 index.

Weak interest income

• Interest income decline: The net interest income of the three major banks has been continuously decreasing since the first quarter. JPMorgan Chase's net interest income fell to $22.8 billion, Wells Fargo fell to $11.9 billion, and Citigroup fell to $2.7 billion.
• Interest rate impact: The effect of high interest rates on bank profits is gradually diminishing, as the rise in deposit costs has quickly caught up with the increase in loan interest rates.

Provision for credit losses

• Credit risk: JPMorgan Chase increased its credit loss provision by $3 billion in the second quarter, while Wells Fargo's credit loss provision increased to $1.2 billion and Citigroup's increased to $2.5 billion, a year-on-year increase of 36%.
• Expected impact of interest rate cuts: Interest rate cuts may increase net interest income in the short term, but also indicate that the Federal Reserve expects the economy to cool enough to prevent inflation from rising again, increasing the risk of borrowers repaying loans.

Weak loan growth

• Loan balance changes: JPMorgan Chase's loan balance remained at $1.3 trillion in the second quarter, basically unchanged for four consecutive quarters. The average loan balance of Wells Fargo has decreased to $917 billion, marking the fourth consecutive quarter of decline. Citigroup's loan balance increased by 2% compared to the same period last year to $688 billion, but decreased by $1 billion compared to the end of 2023.
• Future outlook: The Federal Reserve's interest rate cuts may promote loan growth, but banks need to issue enough new loans to compensate for the decline in interest rate income caused by the cuts.