So two of the biggest banks, JPMorgan and Citigroup, have just released their third-quarter earnings. Once again the figures are, on the face of it, better than had been forecast. But once again the markets aren't particularly impressed. Shares in both banks are down slightly after very strong periods for the sector as a result of Donald Trump's election.
So the big area of weakness is fixed income revenues, as had been expected. This has been quite a big theme for the biggest US banks for several months now. It's just no clients. They are sitting on the sidelines not doing much trading, and that hurts. The bond trading partners are really crucial sorts of profits for the biggest US buying for years.
And as I say, I think people recognise that this is a cyclical business. The fact that trading revenues have been weak for a few weeks is hardly the end of the world, but there are also questions in the results about the consumer banks. Loan growth is not as strong as it could or should be. John Gerspach, the chief financial officer at Citi, noted policy gridlock in Washington as being-- not causing a dramatic slowdown, but saying that corporate borrowers are not borrowing as much as they might be.
And there are also rising levels of reserves being set aside for bad loans. Again, nothing dramatic, but low levels of losses have been very helpful for the banks in recent years, and there are signs that that's starting to reverse.
But there clearly are areas of strength in these results. The Federal Reserve's interest rate rises are allowing the banks to increase charges for borrowers and keeping deposit rates receivers pretty much on hold. In JPMorgan case has helped lift the all-important lending margin. At Citi, the results were supported by cost cutting, some improvement in Latin America, and also some support from its equities trading business that offset the weakness in fixed income.
So overall, kind of mixed batch of earnings suggests that much of the expected boost from Donald Trump's election has yet to materialise. But both bulls and bears will probably find arguments to support their case.