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ECONOMIC PROPHETS?
By Staff Reporters
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Trying to read the economy is difficult But, some of the biggest financial institutions in the US—including JPMorgan, Bank of America, and Citigroup—will release their earnings reports for the final quarter of 2022 this morning. And they’ll share precious insight into the risk of a recession as an uncertain 2023 kicks into gear.
CITE: https://www.r2library.com/Resource/Title/082610254
Why are banks considered economic prophets?
According to Morning Brew and others, it is because their tentacles touch so many aspects of the economy (from consumer spending via credit cards to business health via commercial loans), that they can see into areas single-sectors where others can not.
Banks are hurting. Goldman Sachs just launched its biggest cost-cutting efforts since the 2008 financial crisis, laying off 3,200 employees (or 6.5% of its entire workforce) this week. And it’s not the only one reducing headcount: Morgan Stanley and Citi are among the other global banks that have trimmed their workforce recently as business slowed due to the Fed’s rate hikes. Overall, big banks’ profits are expected to have dropped 15% in Q4 from the year before.
But it’s not all bad. Rising rates can benefit banks—as lenders, they make more money when they can charge higher interest to borrowers. Of course, banks also need to pay out interest to their depositors, too, but the gap between their lending profits and their depositor payouts (known as the “net interest margin”) is expected to widen—at least for now.
Consumer watch: Pay attention to how much banks have set aside to cover defaults on mortgage, auto, and credit card loans. That’ll give us a peek into how American consumers are dealing with inflation.
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Filed under: Breaking News, Funding Basics, Investing | Tagged: Bank America, bankers, banks, BANKS: Bankers and the Economy, CitiGroup, economy, Goldman Sachs, inflation |
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HSBC
“In 2012, the bank paid $1.9 billion to settle charges brought by U.S. authorities that it had failed to prevent money laundering by Mexican drug cartels.
“In 2013, HSBC was fined $1.92 billion by US and UK regulators for its role in the manipulation of the London Interbank Offered Rate (LIBOR), a benchmark interest rate.
“In 2014, the bank was charged by the U.S. Department of Justice for violating sanctions against Iran, Sudan, and other countries.
“In 2018, the bank was charged by the US Department of Justice for violating the Bank Secrecy Act and anti-money laundering regulations.”
Adam
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