With Donald Trump moving into the White House on Monday, companies across the US are assessing what the new administration means for them. For tech companies, it seems to mean a lot of grovelling. For Wall Street, it means soaking up a lot of additional profit.
The fourth-quarter performance of big banks that reported on Wednesday set the tone. JPMorgan’s earnings increased 54 per cent year on year, no mean feat for the country’s largest lender. Goldman Sachs’ leapt 71 per cent, while Citigroup, whose boss Jane Fraser is wrestling with a bumpy turnaround, swung from the red to a $2.6bn profit. Economic conditions seem benign — though it would be a brave bank boss who said otherwise so close to the arrival of the new commander-in-chief.
It’s hard to find a part of their business not experiencing a pre-emptive Trump bump. Interest income remains historically high because the gap between the short-term rates at which banks borrow and the longer-term rates at which they lend has widened. Roughly speaking, that telegraphs falling rates today and rising inflation in future. Depositors — for reasons the banks can’t quite explain — seem prepared to accept much less in interest than they would get in a truly competitive world. JPMorgan expects the current year will bring it $94bn of net interest income, where analysts polled by LSEG had expected $91bn.