Big Banks See First Quarter Profits: Loan Delinquencies Are Diminishing
Apr 19th, 2010 @ 5:05 AM by Debbie Dragon
Could the financial crisis be taking a turn for the better? Some think so with many large banks seeing better than expected first quarter profits. After two years of ups and downs, many banks are hoping that the positive start to 2010 will continue. While banks might not totally be out of the woods just yet, they are making some great gains. It seems there might be a glimmer of light at the end of a dark tunnel. Profits across the board can be partially attributed to less loan delinquencies.
Citigroup, the bank hit the worst by the financial crisis was expected to be in the negative first quarter and surprisingly turned in a profit of just over $4.4 billion. This is the first time in the last 10 quarters that they have been in the positive. This was their largest profit since the spring of 2007. Last year first quarter they showed a loss of $696 million.
While the bank is optimistic, they are airing the gains with caution. “With this quarter, a lot of the dust has settled and you are able to see a clearer picture” about the future of Citi, said Chief Financial Officer John Gerspach during a conference call with reporters, though he said future earnings won’t improve in a straight-line fashion.
Other large banks also saw profits on the rise during the first quarter. Bank or America reported a profit of $3.2 billion. As with Citigroup, the higher profit was due to a decline in default loans.
In a statement, the Chief Executive of Bank of America, Brian T. Moynihan, said,
With each day that passes, the 2010 story appears to be one of continuing credit recovery, and our results reflect a gradually improving economy. Our customers – individuals, companies, and institutional investors – increasingly see the value of our integrated capabilities. We also are seeing ample indications that those integrated capabilities hold promise for long-term shareholder value.
JP Morgan Chase also showed a profit slightly higher than the last quarter in 2009. Their profits were reported as being $3.3 billion.
“While the economy still faces challenges, there have been clear and broad-based improvements in underlying trends,” JPMorgan’s chief executive, Jamie Dimon, said in a statement. “We believe these improvements will continue and are hopeful they will gather momentum.”
Debbie Dragon is a full time freelance writer and the co-owner of ReliableWriters.com.