Editor's note: Morning Scan will not publish on Monday, Jan. 21, in observance of Martin Luther King Jr. Day. We'll be back on Tuesday, Jan. 22.
Receiving Wide Coverage ...
Nice payday JPMorgan Chase CEO Jamie Dimon earned total compensation of $31 million last year, up 5% from $29.5 million the previous year and his best year since he earned $30 million in 2007 before the financial crisis. His pay package included a base salary of $1.5 million, $5 million in cash, and $24.5 million in restricted equity. Wall Street Journal, Financial Times, American Banker
JPMorgan Chase is competing with Square, Block and other firms to capture business from merchants.
Michael Nagle/Bloomberg
Separately, JPMorgan Chase is merging its Chase Merchant Services unit, which handles payments for small businesses, with its Treasury Services division, which serves some of the world’s largest institutions, “as the bank tries to defend and grow market share in the rapidly-changing payments world.” The new unit “will continue to develop our own worldwide payment capabilities, and partner with digital payment companies looking to expand in the U.S. and internationally,” the bank said.
Sometimes you win ... Bank of America managed to buck the trend by growing revenue in its wealth management business. Revenue in the unit rose 7% in the fourth quarter to $4.99 billion, its highest quarterly revenue since the bank bought Merrill Lynch during the financial crisis a decade ago. By contrast, Morgan Stanley, JPMorgan Chase and Wells Fargo each reported steep declines in their wealth management units.
Morgan Stanley’s disappointing earnings results included a 30% drop in fixed-income trading revenue to just $564 million, about half of its $1 billion quarterly target and “significantly worse than Wall Street peers.” Still, “investors shouldn’t overreact,” the Wall Street Journal says. “It was probably inevitable that December’s big swings in stock, bond and commodity prices would have thrown off at least one bank’s trading team. This time around it was Morgan Stanley, which for the prior several quarters had been an outperformer."
“Lacking the consumer banking businesses that insulated many of its rivals from a grim December on Wall Street, Morgan Stanley bore the full weight of ugly trading and a sluggish environment for corporate capital-raising,” the Financial Times noted. CEO James Gorman said the firm doesn’t expect its fourth quarter fixed-income showing “to be standard operating procedure.”
Road to recovery American Express reported a fourth quarter profit of $2.01 billion, and $6.92 billion for the year, more than double the $2.75 billion it recorded in 2017. "The results — and a strong forecast for 2019 — mark a notable recovery for the financial services company, which a year earlier was driven to the first quarterly loss in more than a quarter-century as it absorbed a hit from the U.S. tax overhaul."
Quarterly revenue rose 8% to $10.4 billion, “supported by higher spending by cardholders, higher loan volumes and increased fees.” However, the Financial Times points out, “total expenses grew ahead of revenues, driven primarily by higher rewards for cardholders.”
Wall Street Journal
Talk is cheap Malaysia’s finance minister said he wasn’t interested in an apology from Goldman Sachs for its alleged role in the 1MBD scandal, which CEO David Solomon has blamed on a former banker at the firm and government officials. “Only when you pay reparation and compensation, then that will be sufficient,” Lim Guan Eng Lim told reporters, setting a $7.5 billion price tag.
Financial Times
Shotgun marriage The German government is apparently not giving up on the idea of merging its two largest banks, Deutsche Bank and Commerzbank. The finance ministry is “definitely looking” at the possible merger of the two banks, the paper says, and has “stepped up its assessment of options for consolidation in the sector. The move underlines how German officials are worried about the continued financial woes and sliding share prices of the country’s two biggest private sector lenders.”
Tough job Citigroup named David Livingstone to head its operations in Europe, the Middle East and Africa, “a role that will see him guide the bank through the end-game of Brexit.” He was most recently the bank’s chief country officer for his native Australia and New Zealand.
Anybody want a loan? British banks expect consumer lending “to evaporate” during the current quarter “as a weak economic outlook keeps households from taking on new borrowing”, according to a Bank of England survey. “The survey added to a growing body of evidence that political turmoil in Westminster is having a chilling effect on the economy, with the uncertainty leading businesses and consumers to hold off from making major financial decisions.”
Washington Post
What, me worry? The House Financial Services Committee may be “lurching to the left,” but “so far, Wall Street isn’t sweating it.” While the panel under the leadership of Rep. Maxine Waters, D-Calif., “should generate headline headaches for the industry and make for some uncomfortable moments for top executives under the committee’s hot lights … they don’t expect a divided government to pass major legislation.”
Quotable “As an experienced leader with a history of bipartisanship, we are confident Chairwoman Waters will lead a committee focused on issues of interest to the well-being of all Americans.”— Kevin Fromer, CEO of the Financial Services Forum, which represents the CEOs of the eight largest U.S. financial institutions.
At a time of mild or nonexistent loan growth, middle-market borrowers in the Lone Star State are providing a boost to Fifth Third Bancorp and Huntington Bancshares.
New details have emerged about the negotiations that culminated in Capital One's blockbuster $35 billion agreement to acquire Discover. At one point last December, the two parties broke off discussions, according to a securities filing.
According to the Federal Reserve Board's latest financial stability report, persistent inflation and policy uncertainty are the primary worries for banks. Survey respondents expressed heightened anxiety over murky policy outlooks due to geopolitical turmoil and rapidly approaching domestic elections.
The Alabama regional lender says it expects expenses to taper off this year and anticipates challenged loans will gradually rise to historically average levels.
Truist Financial's top executive leadership team announces departures; First Horizon's chief credit officer is retiring; Ferry teams with Highnote to roll out a new Visa-branded payroll card; and more in the weekly banking news roundup.
The Dallas-based regional bank tapped a client for its co-pilot capabilities, where employees can message a bot instead of a human to get tech assistance.
