FirstFT: US banks make record $80bn in first-quarter profits despite turmoil

Essentially the most vital stress because the 2008 monetary disaster didn’t damp US banking income, which climbed 33 per cent from a yr in the past to achieve an all-time excessive of roughly $80bn within the first quarter.

The turmoil was largely answerable for the bumper haul. About half of the rise within the trade’s combination income got here from one-time good points recorded by First Residents and Flagstar, which purchased the remnants of Silicon Valley Financial institution and Signature Financial institution, respectively, after they have been seized by regulators and bought off at a reduction in March.

Even so, the soar in income additionally confirmed US banks basically benefited from rising rates of interest, low mortgage defaults and an increasing job market regardless of nervousness amongst depositors and traders.

Of the nation’s almost 4,400 banks, simply 197 — or lower than 5 per cent — made losses within the first quarter, in line with BankRegData, which collates quarterly reviews made by lenders to the Federal Deposit Insurance coverage Company.

Listed below are two opinion items I like to recommend on what comes subsequent for the banking sector.

Stopping turmoil: Whereas circumstances have stabilised, extra have to be accomplished to cease a 3rd section of financial institution tremors, writes Mohamed El-Erian.

Congress should act: The US must reinstate measures that shielded operational enterprise accounts throughout the pandemic to guard smaller banks, writes Sheila Bair, former chair of the US Federal Deposit Insurance coverage Company.

And right here’s what else I’m protecting tabs on in the present day:

Nato assembly: Defence chiefs meet in Brussels to debate Russia’s warfare in Ukraine.

Google: The tech large holds its annual I/O convention in California, the place chief govt Sundar Pichai is because of communicate.

Outcomes: ABN Amro, Ahold Delhaize, Alstom, Asos, Compass Group, Continental AG, Crédit Agricole, Disney, Eon, Ferroglobe, The New York Instances Firm and Tui report.

Financial information: The US and Germany have shopper worth indices for final month, whereas KPMG and REC launch their jobs report for the UK.

5 extra high tales

1. Unique: Uber has launched flight bookings in its UK app, permitting prospects to e book an entire journey throughout a number of types of transport. Learn extra on the ride-booking large’s push to turn into a journey “tremendous app”.

2. US president Joe Biden has urged Republicans to “take the specter of default off the desk” after his first massive assembly with congressional leaders on the debt ceiling failed to achieve a breakthrough. Social gathering leaders are as a consequence of meet Biden once more on Friday. Right here’s what might occur if the US defaults on its debt.

3. COP28 has employed a former aide to Boris Johnson who opposed a tax on oil and fuel firms. The choice to tackle rightwing strategist David Canzini, who suggested the UK prime minister in his previous few months in workplace, has prompted concern amongst environmentalists.

4. A Saudi Arabia state-backed group is taking a look at launching an English-language information channel that might rival Qatar’s Al Jazeera. Learn extra on the dominion’s plans to develop its international media affect.

5. Donald Trump has been discovered responsible for the sexual abuse of a journalist in a Manhattan division retailer within the Nineteen Nineties, in a major authorized defeat for the previous US president as he mounts a 3rd bid for the White Home. The jury awarded plaintiff E Jean Carroll, a former recommendation columnist and TV presenter, a complete of $5mn in damages.

The Huge Learn

Russia’s tough diamond exports have been value $4bn in 2021, solely a fraction of its crude oil exports. However each accessible income supply is vital to Moscow’s treasury because it bankrolls its invasion of Ukraine. This month, G7 officers are anticipated to focus on the sale of Russian diamonds of their nations in a bid to squeeze Moscow’s entry to finance and — they hope — impede the Kremlin’s means to wage warfare.

We’re additionally studying . . . 

Government pay: With chief executives within the US making a median $13.4mn in contrast with $5.5mn within the UK, does it pay for British executives to maneuver throughout the pond?

Conflict tech: The invasion of Ukraine has sped up disruption from revolutionary navy applied sciences equivalent to sensors, robotics and unmanned programs.

Sudan and China: The African nation’s battle has dealt a blow to Beijing’s lending technique with the continent, placing at additional threat loans value at the least $5bn.

Chart of the day

In 1900, the UK had 3.3mn horses to offer pulling energy, transport and cavalry. Now, they’re an outmoded know-how. With the rise of synthetic intelligence, Martin Wolf asks if the identical destiny awaits people.

Take a break from the information

Within the central African rainforest, forest elephants emerge from the jungle to congregate in better numbers than wherever else on earth. Don’t miss Monetary Instances Africa editor David Pilling’s reflection on a one-of-a-kind journey to Sangha Lodge, a jungle sanctuary.

Further contributions by Gordon Smith and Emily Goldberg