Banks see a 'resilient' US economy but warn of negative impacts from rising energy prices

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NEW YORK (AP) — The nation’s biggest banks posted another quarter of strong profits, helped by a resilient economy and a flurry of dealmaking for their investment banking units.

But the strong profits were clouded by the bank’s outlook for 2026, as bank executives warned how high oil prices were starting to negatively impact the consumer and further geopolitical uncertainty could hamper economic growth as the year progresses.

“There is an increasingly complex set of risks,” Jamie Dimon, CEO and chairman of JPMorgan Chase, said in a statement, referencing to wars, energy prices and trade wars as some of the current risks in the global economy. In response, the bank slightly lowered its full-year profit forecast.

Dimon further called these tensions as “significant and they reinforce why we prepare the firm for a wide range of environments.”

This quarter, it was the investment banks at all of the major banks that drove revenue to Wall Street during the first three months of the year. JPMorgan reported a 30% jump in investment banking fees, while Citigroup reported a 12% rise in advisory fees.

The rise in markets and investment banking fees was not a surprise. Markets have been intensely volatile in the first three months of the year, and those swings of volatility are great for the professional trading desks stationed at all the major banks. Further, many companies are pursuing mergers, acquisitions or going public, which has provided another stream of revenue for Wall Street.

However, bank executives warned that the extreme swings could have downstream impacts to the U.S. economy, particularly energy prices. In a call with reporters, Wells Fargo Chief Financial Officer Mike Santomassimo said the bank was seeing customers was spending 30% to 40% more toward gas on their debit cards, while cutting back on discretionary purchases. CEO Charlie Scharf added to those comments in a call with investors, saying higher energy prices were putting pressure on some of its lower income customers.

While Dimon described the economy was “resilient” he also said, “the impact of higher oil prices will likely take some time to materialize” in the economy if it lingers.

The American consumer also continues to spend more on their credit cards as well as add to their balances on those accounts. JPMorgan said credit card loans were up 7% from a year ago, while Citigroup also saw its credit card loans rise by a lesser 2%.

JPMorgan posted a profit of $16.49 billion, up 13% from a year earlier. On a per-share basis, the bank earned $5.94. Wells Fargo earned a profit of $5.25 billion and Citigroup had a profit of $5.79 billion.

Wells Fargo said that it had roughly $36 billion in exposure to private credit loans, but that those loans are still performing well. Investors have been concerned about Wall Street's exposure to private credit, which are loans made between a bank or private credit fund to companies that became a popular form of financing in the last several years. But those private credit loans have been showing signs of deterioration, and there have been some private credit funds that have had investors asking for their money back.

JPMorgan and Citi also said they had $50 billion and $22 billion in exposure to private credit loans, respectively.

In a call with investors, JPMorgan's Chief Financial Officer Jeffrey Barnum said the bank remains “broadly comfortable” with the private credit loans on its books.

On Monday, Goldman Sachs reported first-quarter net earnings of $5.6 billion, or $17.55 per share, on net revenue of $17.2 billion, as strength in its trading and investment banking businesses also lifted its results.