In Q1, JPMorgan Chase & Co (JPM.N) recorded a substantial increase in deposits, attributed to customers shifting their funds to bigger banks following the sudden failure of two regional U.S. banks in March.
According to their first-quarter earnings report, the largest U.S. lender acquired $50 billion in deposits by the end of March. In comparison, Citigroup Inc (C.N) experienced relatively stable deposits, while Wells Fargo & Co (WFC.N) witnessed a decline.
According to JPMorgan’s finance chief, Jeremy Barnum, the bank anticipates a slight decrease in deposit inflows for the remainder of the year.
To evaluate a bank’s ability to finance its operations and manage potential financial disturbances, analysts are closely examining their balance sheets. “Investors are thoroughly assessing different components of bank deposit bases to gauge liquidity, net interest margin (NIM) stress, and funding profiles,” noted Autonomous Research analysts, led by John McDonald, in a March report.
After the market shakeup caused by the failures of Silicon Valley Bank and Signature Bank last month, investors have been closely analyzing deposits. In response, regulators stepped in to safeguard the deposits of these banks’ customers.
During March, the three major banking players experienced varying changes in deposits. JPMorgan’s deposits rose by 2% to $2.38 trillion at the end of Q1 compared to the end of 2022. Although Citigroup’s deposits remained stable at $1.33 trillion, CFO Mark Mason reported a “significant inflow of deposits” attributed to the market turbulence.
On the other hand, Wells Fargo witnessed a 2% decline in deposits to $1.36 trillion as clients transferred their funds to higher-yielding accounts and products.
Stephen Beck, the founder and managing partner of cg42, a consulting firm in New York, stated in an email on Friday that consumer deposits across the industry are expected to decrease in the coming months due to inflation and an approaching recession.
