What Do Bank Earnings Tell Us?

Sure, winter seems to have taken a firm grip over much of North America, but here at the Insider the only season we are focused on is earnings season. The big banks started reporting last week; regionals take the baton this week. What have we learned so far? 

While you might see words like “downbeat” or phrases like “really bad” used to describe Q4 results, those numbers can largely be chalked up to the one-time special assessment larger banks needed to pay to replenish the deposit insurance coffers at the FDIC. The six top lenders alone chipped in a combined $9.4 billion. For the entire year, the biggest banks posted “strong profits,” especially considering 2023 challenges including continued and aggressive rate increases by the Fed, persistent albeit easing inflation, ongoing international conflicts, and a regional banking crisis. 

A couple takeaways: 

“The consumer still has plenty of firepower.” Those were the words of Alastair Borthwick, chief financial officer at Bank of America. And indeed, financial stability prevailed—somehow—for American consumers and businesses in 2023, as reflected in earnings for major banks. The four largest banks brought in a combined $104 billion of profit, reflecting an 11% increase from the previous year. (Regional banks are off to a less sanguine start, however.) 

Digital engagement is up. Bank of America, for example, said that 75% of its customers were active users of digital banking tools, and active digital banking users increased 5% from the previous year to 46 million. At JPMorgan, mobile use was up 8% to more than 53 million active users. And Wells Fargo reported an 11% increase in mobile logins from a year ago. The bank points to digital adoption as a factor in its decision to shrink its number of physical branches by 6% over the past year.