Bank CEOs are as in the dark as everyone else about the likely impact of President Donald Trump's chaotic rewiring of the nation's trade policies.
The top executives at
By and large, there weren't meaningful slowdowns in business activity at those banks during the first quarter of the year, as Trump began his second term in office, or during the first several days of the second quarter, despite the April 2 rollout of the administration's aggressive, and ever-changing, global tariffs plan, the CEOs said. But it's unclear how things will shake out.
"I think everything that we see in the behavior, in terms of both our consumers as well as our corporate customers, has been just continued strength, which is a great position to start from," Wells CEO Charlie Scharf said during the company's first-quarter earnings call. "But everyone is trying to assess the situation in terms of, 'Will there be a resolution to some of these things? What does it mean for their business?' And that's not completely clear."
Friday marked the first day of banks' first-quarter earnings season. The banking industry isn't directly impacted by tariffs, but the indirect effects could be substantial. Most consumers and commercial banking clients will be hit by tariffs, which will have broad effects on the U.S. economy.
On Wednesday, in a new twist just hours after implementing country-specific tariffs, Trump said he would reverse those tariffs for 90 days. But baseline 10% tariffs on U.S. imports, as well as a whopping 125% tariff on China, are still in place.
BNY CEO Robin Vince expressed a downbeat view of what could unfold.
"I think with the 90-day pause on tariffs, and then probably a fairly long tail on full emergence of a clear picture, I think you have to be a little bit pessimistic here about how the economy is going to evolve over the course of the next six to nine months," Vince told analysts. "I'd love to be wrong on that one, but I think as every day goes by … this trade has negative carry."
The past week's market volatility, which was kick-started by Trump's tariff announcement on April 2, has battered bank stocks. The KBW Nasdaq Bank Index, which tracks the 24 largest U.S. banks, fell 12.9% between April 2 and April 10.
On Friday afternoon, it was up less than 1%.
The company maintained its expectations for net interest income, expenses and card charge-offs for full-year 2025, and it even upped its predictions for revenue from its markets business. But Chief Financial Officer Jeremy Barnum cautioned that the forecast is "contingent on a variety of external variables."
To quell some of the market uncertainty, it would be helpful if Treasury Secretary Scott Bessent and the Trump administration "finish as quick as possible the agreements that they need to make around tariffs, and with our trading partners," Dimon told analysts.
"And I think there will be agreements in principle," he added.
Still, a final word on trade policy won't completely assuage markets, he said, as
"Honestly, add that to the list of worries," Dimon said. "We will be in the crosshairs. That's what's going to happen. And you know, it's OK. We're deeply embedded in these other countries. People like us. But I do think some clients, or some countries, will feel differently about American banks, and you know, we'll just have to deal with that."
Morgan Stanley Chairman and CEO Ted Pick was realistic about the lack of clarity regarding the future, but he was also largely optimistic about his own firm's ability to weather future challenges caused by a trade war and ongoing market disruption.
President Trump placed a 90-day pause on most of his sweeping tariff package, but for banks and other financial market participants, the threat of volatility remains.
"The simple truth today is that we do not yet know where the trade policy will settle, nor do we know what the actual transmission effects will be on the real economy," Pick said.
When pressed by
"If it is the case … that three or four months from now, if the markets have gotten even more complicated around these weighty issues [and] the adjustment period looks like it will be a longer one, it's more of a 'delete' kind of thing. But I am of the view [that] we are still on pause. We don't know whether the economy is going to contract."
Morgan Stanley has had a close relationship with Japan's Mitsubishi UFJ Financial Group since 2008 when the two banking giants began collaborating on client-facing businesses. Morgan Stanley has no intention of stepping away from that relationship, or from its operations in India, China or Europe, even if the U.S. moves toward de-globalization, Pick said.
"I'm really quite bullish on our international business, and we will navigate the next
number of months and quarters with care," Pick said. "We will push forward."
Overall, banks are well-positioned for volatility, with strong capital, liquidity and credit profiles, Scott Siefers, an analyst at Piper Sandler, told American Banker.
During the Friday morning earnings calls, bank leaders weren't expressing "an undue amount of alarm," Siefers said. But they were realistic about the geopolitical and economic uncertainty that's emerged in recent weeks.
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Nathan Place, Catherine Leffert and John Reosti contributed to this report.
