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U.S. bank executives see delayed boost from tax overhaul

Reuters  |  NEW YORK 

By Meredith Mazzilli

NEW YORK (Reuters) - have not reaped the full benefit of U.S. cuts, Wall Street executives said on Friday after a string of quarterly results, with expected business growth and higher consumer spending yet to materialize.

Analysts and investors are still trying to work out the longer-term effects of the rewrite signed into law in December, which slashed the federal corporate rate.

Asked what impact & Co is seeing from the new law, the bank's chief, John Shrewsberry, said "not much yet."

executives said last quarter that cuts and changes in capital expense deductions should stoke broad economic growth, fuelling expectations of higher lending and capital markets activity.

"It has not been a big mover of our business or what you can see in the real economy," Shrewsberry said, though he expects that to change later this year.

There has been some wage growth but consumer spending has not picked up accordingly, he said. has not had any unusual uptick in loan demand or meaningful changes to how products and services are priced, he added.

"As much as we're all eager to see the benefits ... I think we have to recognise that reform is still in the early phases," & Co said on a after the reported first-quarter results.

She told reporters earlier that JPMorgan expects to see benefits, but "with a lag."

"While client sentiment is high in the wake of corporate reform and we remain hopeful that this will support higher demand later in the year, we're not seeing that yet, and we are maintaining pricing and credit discipline," Lake said about loan demand.

Financial markets have already reflected investors' enthusiasm about the cuts, said on a call with reporters to discuss results, and the actual benefit to the U.S. economy will only come once investment plans are finalised.

"A lot of corporate actions are in the planning stage. People usually have nine to 12 months to plan for reform. People had a chance to digest this right around the last three weeks of last year," Gerspach said.

A cut in the federal corporate rate to 21 percent from 35 percent has helped boost profit, but other details of the new code have not helped their bottom line.

said interest income slipped 1 percent in the first quarter due in part to lower income from so-called in light of newly lowered rates.

Lower tax-equivalent yields on municipal bonds should weigh on year-over-year comparisons of the lender's net interest margin by around 4 basis points for the rest of the year, Shrewsberry said on an call.

The third-largest U.S. by assets also flagged that changes had weighed on new debt issuance and secondary trading, though strong equity trading helped boost its total trading-related revenue.

(Reporting by Meredith Mazzilli, and in New York and Sweta Singh in Bengaluru; Editing by Bill Rigby)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sat, April 14 2018. 00:04 IST