For once, Wells Fargo and J.P. Morgan have reason to celebrate. Making news for all the wrong reasons this year, the two banks each booked strong third quarter performances, buoyed mainly by a gradually improving mortgage business.
Wells Fargo saw its profit increase 22% in the third quarter, backed by $2.81 billion in mortgage banking non-interest income, up 53% from a year ago, according to The Wall Street Journal. The San Francisco bank’s revenue increased 8.1% to $21.21 billion, falling shy of analyst expectations.
J.P. Morgan, meanwhile, saw a 34% jump in third quarter net income, spurred by its home loans business and strong fixed income trading, compelling Chief Executive James Dimon to note that "the housing market has turned the corner."
The sunny news comes at a key time for the two banks, each embroiled in scandals and lawsuits that have left them with a sullied reputation and on the hook for potentially billions in liabilities.
The third quarter performances also highlight a small Wall Street secret: banks are still making piles of money. The six largest U.S. lenders combined to generate roughly $63 billion in profit for the year ended in June. It’s declining share prices, escalating capital requirements and fear of an impending fiscal cliff that’s leading to massive job cuts.
RBS Eyeing Privacy (WSJ)
Royal Bank of Scotland, majority-owned by the government following a 2008 bailout, is moving closer to becoming re-privatized. The bank is negotiating to exit the Asset Protection Scheme, an expensive program that safeguards certain assets against default.
Cloudy Future (eFinancialCareers)
Financial services firms appear less nervous about investing in cloud computing and mobile development, and are hiring in-house technology specialists as a result.
Female-Friendly Firms (eFinancialCareers)
Sadly, not all financial services firms are all that female-friendly. Here are some clues to look for when determining whether you’re interviewing at a diverse 21st century firm or an old boy’s club.
Charges Dropped (Bloomberg)
Prosecutors have reportedly dropped assault and hate crime charges filed against William Bryan Jennings, the Morgan Stanley U.S. bond-underwriting chief arrested last year for allegedly stabbing a New York City cab driver. Jennings remains on leave from Morgan Stanley.
Octavian No More (FIN Alternatives)
Octavian Advisors, the $1 billion New York hedge fund founded by activist Richard Hurowitz, will close its doors sometime next year. Hurowitz cited the difficult economic climate and poor political decision-making as reasons for shuttering the six-year-old firm.
Welch Standing Tall (CNN Money)
Jack Welch, who recently made headlines for suggesting the latest government jobs report was rigged, refuses to back down from his widely criticized statement, noting in an op-ed that the 7.8% unemployment rate is "downright implausible.”
Buzz Around the Office
Dogs Are Awesome (CBS Boston)
Two golden retrievers who broke free from a double leash went missing for two weeks before, amazingly, one of the pups made it home. He then dragged his owner through the woods to find his brother, whose part of the leash had him trapped in thick brush.
List of the Day: Staying Organized
A crowded desk often leads to a clouded mind. Here are three essentials to keeping both working in your favor.
- A paper shredder.
- A label maker.
- A physical or electronic day planner.
(Source: The Daily Muse)