Stock Market Crash IMMINENT as Dow Up 534 Points and Banks Profit Despite Loan Revenues Declining

Oct 14 (Reuters) – Citigroup Inc (C.N), like its Wall Street peers, made the best of a boom in dealmaking to post strong quarterly profit on Thursday, fending off a weakness in its lending business, which the bank’s management said would continue to be under pressure.

The reserve release along with a surge in deals helped Citi offset declines at its consumer bank due to lower interest income as customers saved up on cash during lockdowns and paid off loans. Net interest revenue declined 1% from a year earlier.

Executives said on Thursday that the bank had struggled to grow its lending business, even though consumer spending picked up during the quarter.

"Healthy consumer balance sheets and persistently elevated payment rates did mean that loan growth remained under pressure," CEO Fraser said.

A sizzling hot stock market and cheap borrowing costs have helped U.S. companies raise billions of dollars in debt and equity and funnel a big share of it into deals, for which they used large investment banks for advice.

The torrid pace of dealmaking boosted investment banking fees to an all-time record in the first nine months of the year, with banks like JPMorgan Chase (JPM.N), Citi and Morgan Stanley (MS.N) benefiting the most.

"It was Citi’s best M&A quarter and the second best investment banking quarter in a decade," Chief Executive Jane Fraser said on a post-earnings conference call with analysts.

Banks’ 2021 Reality: A ‘Revenue Recession’ In The Midst Of An Economic Recovery
consider the following:

Bank of America’s Q2 2021 profit was $9.2 billion—up from $3.5 billion in Q2 2020—thanks in part to releasing its reserves. Revenue, however, was down 4% YoY and fell short of analysts’ expectations.
Citi’s Q2 per-share earnings of $2.85 exceeded analysts’ expectations by 89 cents. But consumer banking revenues declined 3% in Q2 2021 from the prior quarter and was down 7% from the same period a year ago.
Mortgage banking revenue at Citizens Financial Group fell sharply during the second quarter. Fee income from mortgages totaled $85 million in the second quarter, compared with $276 million in the same quarter last year.

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Author: H. A. Goodman

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