The Institutional Risk Analyst

© 2003-2021 | Whalen Global Advisors LLC  All Rights Reserved in All Media |  ISSN 2692-1812 | Terms & Conditions

Register for Updates Now!

Financials: Shrinking NIM, Fading Deregulation


New York | There are a number of factors that have led to the historic gains seen in equity markets since the election of Donald Trump and the subsequent tax cuts, especially when it comes to financials. Some of these assumptions were never realized, others no longer pertain. Number one was the idea that tax cuts would drive an increase in economic growth, and thus add more borrowing volumes for banks.

Overall, the promise of tax cuts has yet to arrive for the banking industry when it comes to credit volumes. JPMorgan Chase (JPM) did manage to turn in some impressive lending growth, mostly in credit cards. But the overall financial performance of JPM came due to some one-time events, benefits on the legal expense line and a big pop in principal transactions. Lending fees and loan volumes overall rose a whole 2% year-over-year (YOY).

The Trump tax cuts added four hundred basis points to bank equity returns this quarter, but the top line remains constrained. With EPS of $2.38, JPM’s basic earnings per share rose 40% YOY. Return on equity rose to 15% according to the JPM IR supplement. Notable for readers of