Wall Street banks are in a celebratory mood

Wall Street banks are in a celebratory mood at the beginning of the second year of the pandemic. JP Morgan, Goldman Sachs and Wells Fargo all increased their earnings many times over in the first quarter. The banks are benefiting from the gigantic economic aid from the US government and the boom on the stock exchanges. "We believe the economy has the potential for extremely robust growth over several years," said JP Morgan chief executive Jamie Dimon. The industry leader JP Morgan earned almost five times the previous year's figure with 14.3 billion dollars. Goldman Sachs increased net income sixfold to $ 6.7 billion. Analysts at both banks had expected a significantly lower increase. JP Morgan and Goldman Sachs each lowered their risk provisioning for bad loans because the feared loan defaults were lower thanks to government aid. At the beginning of 2020, the financial institutions had significantly increased their risk provisions because they expected a sharp rise in defaults due to the Corona crisis. The trillion dollar economic stimulus measures of the US government around the new President Joe Biden also ensure that private consumption does not collapse so severely. At the same time, due to the crisis, companies have a greater need for advice and are more active on the capital markets. JP Morgan earned more than ever in investment banking, at $ 2.9 billion. Goldman Sachs increased its income in the division by almost three quarters to 3.8 billion dollars, the highest level since 2010. Deutsche Bank is also likely to have benefited from the boom in the capital markets, with a large presence in the fixed-income bond business. The bank will present its first quarter results on April 28th. Wells Fargo also significantly reduced its loan loss provisions. The fourth largest US bank increased its profits to 4.74 billion dollars - more than seven times as much as a year ago. Analysts had also expected less here. In contrast, income increased only slightly. Wells Fargo doesn't have as much investment banking as the other two institutions. Goldman Sachs has also benefited from the growing business with wallet jackets, the so-called SPACs, in recent months. These "Special Purpose Acquisition Companies" are listed companies without a business of their own, but with the aim of bringing another company public through a merger. Investment banks collect substantial fees with it. In addition, Goldman Sachs played a key role in organizing the IPO of the cryptocurrency platform Coinbase, which is valued at almost 50 billion dollars.