The profits of large American banks are proving to be quite stable, while their European counterparts continue to lag behind. The next two months are expected to provide more clarity on this disparity.

Today, the American heavyweights JPMorgan Chase, Citigroup, and Wells Fargo present their second-quarter results.

JPMorgan reported a remarkable 25 percent profit surge: $18.1 billion compared to $14.5 billion in the same quarter last year. This increase was primarily driven by a restructuring of JPMorgan's stake in Visa.

Visa Effect Boosts Earnings

In the second quarter, JPMorgan converted its equity stake in Visa into common stock of the credit card giant, earning nearly $8 billion in a one-time gain. Without this and other special effects, the profit would have slightly declined to $13.1 billion. Revenue increased by 22 percent to $50.2 billion.

Wells Fargo also showed a small profit decline in its core business: the San Francisco bank posted a profit of $4.91 billion, 1 percent less than the $4.94 billion profit in the same quarter last year. Revenue rose by 1 percent to $20.7 billion.

Fears Not Realized

Only Citigroup managed to make significant progress without special effects: With a quarterly profit of $3.2 billion (up from $2.9 billion in the same quarter last year), it pleasantly surprised analysts, who had expected a decline to $2.7 billion. Revenue amounted to $20.1 billion.

Concerns that the American banking sector would be burdened by increasing loan defaults, especially in corporate loans, have not materialized so far.

High Bar for Europeans and UBS

American banks continue to make money at a high level.

This sets a high bar for European banks, which will also report their results in the coming months.

UBS Reports on August 14

In Switzerland, the quarterly results of the remaining major bank UBS, scheduled for August 14, are of particular interest. Julius Baer will report on July 25, followed by Vontobel a day later.

UBS posted a profit of around $30 billion in the second quarter of 2023 following the acquisition of Credit Suisse. After accounting for the one-time effects of the acquisition, two negative quarters followed in the second half of 2023 and a profit of $1.8 billion in the first quarter of 2024.

Regarding profits, US banks have largely decoupled from their European counterparts, including UBS. The recent figures from major US banks suggest no immediate change in this trend.