Banking giant JPMorgan sees an increase in deposits in Q1 2023

JPMorgan Chase & Co has reported a significant deposit increase during the first quarter of 2023. The bank has been reporting positive inflows following the unexpected collapse of two regional banks in the US, Silicon Valley Bank and Signature Bank. The collapse of the two banks led to customers transferring their money to top lenders.

JPMorgan reports a surge in deposits

JPMorgan Chase & Co is the largest lender in the United States. The bank gained $50 billion worth of deposits by the end of March, according to data released in its Q1 2023 earnings results. The results posted by JPMorgan Chase might be the best from the US banking industry.

The other lenders that have released their earnings data did not have a strong quarter as JPMorgan. Deposits at Citigroup Inc remained relatively flat during the quarter, while there was a notable decline in deposits at Wells Fargo & Co.

The finance chief at JPMorgan, Jeremy Barnum, said he anticipates a modest outflow in deposits for the remainder of the year. The collapse of SVB and Signature Bank triggered uncertainty across the US banking industry. The Federal Reserve’s monetary tightening policy has also slowed down the economy.

Analysts expect that the earnings reports now being released will shed light on the strength of the US economy. Analysts are currently monitoring balance sheets to determine how easy it will be for lenders to fund their operations and monitor whether these lenders have enough to cushion them in case of shocks across the financial sector.

Investors will also scrutinize the results to make changes in their portfolios. Some areas that investors will pay increased attention to include the bank deposit bases, asset funding profiles, net interest margin pressures, and overall liquidity.

Investors have also been paying close attention to deposits following the collapse of two top US lenders last month. The situation with SVB and Signature Bank prompted US regulators to guarantee uninsured deposits to ensure no further contagion in the market.

JPMorgan has the highest deposit volumes compared to other top banking giants. In March, the bank reported s 2% increase in deposits that hit $2.38 trillion by the end of the first quarter. On the other hand, deposits at Citigroup remained flat at $1.33 trillion by the end of the first quarter. However, the bank’s CFO, Mark Maso, had said there was meaningful deposit inflow because of the turmoil.

Consumer deposits expected to decline

The deposits at Wells Fargo dropped by 2% to $1.36 trillion as customers started transferring funds to high-yielding accounts and products. Because of inflation and the looming recession, consumer deposits across the industry are also expected to drop in the coming months.

The Federal Reserve is expected to hike interest rates again in the next policy meeting, which will notably impact spending. The aggressive rate hikes by the Fed were recently attributed to the stress faced by US banks.