Profits of four big banks decline as deal-making, mortgages slacken

Four big banks reported noticeable declines in their first-quarter profits on Thursday, as the volatile markets and war in Ukraine caused deal-making to dry up while a slowdown in the housing market meant fewer people sought mortgages.

The results from Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo were similar to the results out of JPMorgan Chase, which on Wednesday reported a double-digit decline in profits.

At Goldman Sachs, profits fell 43 per cent to $3.63 billion.Citigroup posted a 47 per cent decline in profits to $4 billion, Wells Fargo’s profits fell 21 per cent and Morgan Stanley’s earnings dropped 11 per cent. In some ways, comparing this quarter to a year ago doesn’t tell an accurate story of how well Wall Street is doing.

The first quarter of 2021 was helped by the start of widespread vaccination campaigns for Covid-19, as well as recovery in the economy from the pandemic. Banks also released large portions of their loan-loss reserves — money they sock away to cover potentially bad loans in a rough economy — last year. Those were a one-time boost to profits.