Global banks double their profits with high interest rates
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Three banks in the USA went bankrupt in the last two months as a result of the rapid increase in interest rates by the central banks to reduce inflation, which reduced the value of the bonds held by some banks and the loss of deposits in banks.
Following the bankruptcy of Silicon Valley Bank and Signature Bank in March, First Republic Bank was also seized last week and the bank was acquired by JPMorgan Chase Bank.
Likewise, after the developments in Switzerland-based Credit Suisse in March, the government stepped in to rescue the bank and UBS bought the bank with more than 250 billion dollars of public support.
The financial system’s being under pressure due to the increasing interest rates and the tightening in monetary policy in the last year and the difficulty in adapting to it triggered the bankruptcy of the banks.
The US Federal Reserve (Fed), at its meeting this week, increased the policy rate by 25 basis points, in line with expectations, to the range of 5-5.25 percent, the highest level in 16 years.
The European Central Bank (ECB), on the other hand, increased the three main policy rates by 25 basis points yesterday, increasing the refinancing rate to 3.75%, the deposit rate to 3.25% and the marginal funding rate to 4%.
The Bank of England is expected to raise the policy rate, which is currently 4.25 percent, to 4.50 by increasing 25 basis points at its meeting on 11 May.
Many large-scale banks greatly increased their profits in the first quarter of this year thanks to these high interest rates and weathered the storm in the banking sector with increased profits.
Banking giant HSBC’s pre-tax profit in the first quarter of this year increased by 210 percent (approximately $9 billion) compared to the same period of the previous year, reaching $12.9 billion. The bank’s revenues in this period increased by 64 percent to $ 20.2 billion.
British bank Barclays’ pre-tax profit in the first quarter exceeded expectations at $3.2 billion (£2.6 billion), up 16 percent, and revenue grew by 11 percent to $9 billion (£7.2 billion).
The pre-tax profit of British Standard Chartered, which makes up most of its income in Asia, increased by 21 percent compared to the same period of 2022 and became 1.81 billion dollars.
– 52 percent jump in the profits of US JPMorgan Chase
JPMorgan Chase, one of the largest banks in the USA, where the problems in the banking sector have increased, increased by 52 percent to $12.6 billion in the first quarter of this year, driven by high interest rates. In the same period of last year, the bank’s net profit was $8.3 billion.
The bank’s revenue reached a record level of $38.3 billion.
Citigroup’s first-quarter net profit rose 7 percent to $4.6 billion, while revenue rose 12 percent to $21.4 billion.
Wells Fargo’s net profit in the January-March period increased by 32 percent compared to the same period last year, reaching $4.9 billion. The bank made a profit of $3.8 billion in the first quarter of 2022.
– BNP Paribas’ profit increase by 140 percent
The net profit of French BNP Paribas, the largest bank in the Eurozone, increased by 140 percent in the first quarter of this year compared to the same period of 2022, reaching 4.9 billion dollars (4.4 billion euros).
The bank’s revenues exceeded expectations at $13.2 billion (12 billion euros). The sale of US-based Bank of the West also contributed to the revenue growth of BNP Paribas.
Deutsche Bank, one of the largest banks in Germany, headquartered in Frankfurt, increased its pre-tax profit by 12 percent in the first quarter to 2 billion dollars (1.9 billion euros) due to the income from high interest rates.
Deutsche Bank’s net income in the first quarter of this year was 7.7 billion euros, up 5 percent compared to the same period in 2022. Although the bank has increased its profits, it also said it may cut down on non-customer staff to further reduce costs in the coming years.
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