Wall Street banks kicked off fourth-quarter earnings on Friday, and the tone was pretty optimistic.
But the brightest spot was the firms’ — and their CEOs’ — commentary on the outlook for 2017.
“With strong leadership positions in our businesses against a backdrop of rising interest rates, we are well-positioned to continue to grow and deliver for our shareholders in 2017,” Bank of America chief executive Brian Moynihan said in a statement.
His CFO, Paul Donofio, referred to the December 2016 rise in interest rates and said “we expect to see a significant increase in net interest income in the first quarter of 2017.”
That firm is increasing its buyback program for the first half of the year to $4.3 billion from $2.5 billion.
Over at JPMorgan, CEO Jamie Dimon was candidly bullish on the US economy.
“The US economy may be building momentum,” he said in a statement. “Looking ahead there is opportunity for good, rational and thoughtful policy decisions to be implemented, which would spur growth, create jobs for Americans across the income spectrum and help communities, and we are wellpositioned to play our part.”
In a presentation, his firm also said it expects net interest income to be up modestly in the first quarter due to interest rate increases.
Meanwhile, the business that had for years been killing Wall Street banks continues to bounce back. Both firms saw continued pick-ups in fixed income, currencies, and commodities trading revenues. At JPMorgan, FICC revenues were up 12% from the year-ago quarter, helping the bank post record fourth quarter markets revenues.
BAML’s FICC revenues increased 31%.
Bank stocks have also seen a massive post-election rally. The SPDR S&P Bank ETF is up 24% since Donald Trump’s electoral win. That’s largely due to expectations that his administration will reduce financial regulations and boost dealmaking and economic activity.
In other words, it looks like there are good things to come for Wall Street banks.