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BLOOMBERG
The largest US banks are about to reveal how they fared as customer deposits came under siege in the first quarter.
Deposits at JPMorgan Chase & Co, Wells Fargo & Co and Bank of America Corp are expected to have tumbled $521 billion from a year earlier, the biggest drop in a decade, according to analysts’ estimates. The decline — which includes a $61 billion slide in just the first quarter — comes as a late influx of cash following a crisis at regional lenders failed to offset the steady drain of customers to products offering higher rates.
Western Alliance Bancorp learned that lesson the hard way last week, when it released updated financial information that left out data on deposit levels.
For smaller competitors like Western Alliance, the problem is twofold: Their customers also want more for their money, and the collapse of three regional lenders has left consumers jittery, prompting them to yank their cash and store it in larger banks instead.
The turmoil has also weighed on bank stocks. The KBW Bank Index is down 19% this year, and lost 25% in March alone. Regional banks were the biggest losers for the period, with First Republic Bank down 89%.
For the five biggest Wall Street banks — a group that includes JPMorgan, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley — trading revenue is expected to slump $3.2 billion, or 10%, to $29.9 billion. Lenders began seeing deposits dwindling as early as the start of last year, as historic levels of inflation ate away at consumers’ savings.