Bank executives’ commentary over the past week made clear they’re worried about where the economy is headed, but their first-quarter results showed little concern.
The six biggest US banks bought back roughly $22 billion of stock in the quarter, a jump of more than 60% from a year earlier. And the group added a collective $1.2 billion to their loan-loss reserves, less than the typical quarter over the past three years.
Such is the dynamic for a quarter in which the “animal spirits” unleashed by President Donald Trump’s election in November collided with the volatility around his policy announcements. The result was a series of earnings reports showing a stock-trading boon across Wall Street and signs of still-healthy consumers and businesses across America, delivered with caveat after caveat that it’s hard to predict what’s ahead.
That dynamic was underscored in an exchange Tuesday between Bank of America Corp. Chief Executive Officer Brian Moynihan and veteran bank analyst Mike Mayo: “I’m just trying to reconcile the $7 trillion of lost stock-market wealth with comments from you,” Mayo said. “Sounds like you’re not blinking.”
Moynihan’s response: “Our economists, your economists, I’m sure are all predicting a slowdown in growth,” the CEO said. But that hasn’t happened yet, and “we don’t want people to lose sight of the strong performance of this company and our team in the first quarter of 2025.”
Bank of America reported $4.5 billion in buybacks in the first quarter, up from $3.5 billion in the last three months of 2024, Chief Financial Officer Alastair Borthwick said Tuesday, adding that there was “some flexibility” to go higher. JPMorgan Chase & Co. bought back $7.1 billion of shares, a move CFO Jeremy Barnum attributed to sufficient excess capital.
The banks also handed out more than $10 billion of dividends, meaning they gave shareholders back more than 80% of their profit, a higher rate than in any of the past four years. That’s driven by confidence they no longer need to hoard capital, with the Biden-era proposal to boost their capital requirements still in limbo and likely to be watered down or even scrapped.
Of course, they also had more profits to pull from: The six firms cracked $40 billion in profit for just the third time ever.
The theme reverberated across regional banks as well. M&T Bank Corp. added $16 million to its loan-loss reserves, which CFO Daryl Bible attributed to “tweaks” in the firm’s economic outlook.
“We just felt comfortable that that was the right thing to do given everything that’s going on and uncertainty in the marketplace,” Bible said on a conference call Monday. “Obviously, if we do go into a recession, we probably would continue to add to the reserves appropriately.”
JPMorgan’s Barnum said his firm took a similar tack, increasing the weighting of “downside scenarios,” which drove the firm’s $973 million reserve build — by far the biggest among the big banks.
“It’s important to note that the increase in the allowance is not to any meaningful degree driven by deterioration in the actual credit performance in the portfolio, which remains largely in line with expectations,” Barnum said.
Citigroup Inc.’s reserve build also included “a further skew to the downside scenario,” CFO Mark Mason said Tuesday. Even so, the firm’s traders beat expectations and the wealth and retail businesses pulled in record revenue, amounting to a win for CEO Jane Fraser as she reshapes the firm.
“In terms of the macro environment, I am not going to try to predict the unpredictable,” Fraser said Tuesday. “The world is in a wait-and-see mode and is facing a more negative macro outlook than anyone had anticipated at the beginning of the year.”
Written by: Hannah Levitt — With assistance from Yizhu Wang, Weihua Li, and Keith Gerstein @Bloomberg
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