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Home » Daily Briefing » Daily Briefing - 16 April 2018

Daily Briefing - 16 April 2018

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In the United States, quarterly results from JP Morgan, Citigroup and Wells Fargo have topped analysts' expectations, as they were boosted by the significant corporate tax changes brought in last year. JP Morgan posted a record first-quarter profit by any US bank, while its revenue was higher than forecasts by almost $1 billion. Citigroup also saw good quarterly profit come through thanks to positive consumer banking activity resulting in its best quarterly profit in three years: $4.62bn. As for Wells, it performed better than expected with Q1 profit growing from $5.46bn to $5.9bn year-on-year — although a potential $1bn CFPB fine still looms. Bank of America is set to report today.

Meanwhile, two of these banks together beefed up their workforce by some 4,200 in the first quarter — the most significant influx of new employees since 2011. Wells added the majority of that large number of new workers (notable in light of plans to close down some 300 branches), while JP Morgan added the remainder. Citigroup, on the other hand, didn't add to its number, but did go against its own recent trend by not cutting any jobs. As a result, the combined total of people working at the trio of lenders currently sits just under 730,000.

The ongoing royal commission inquiry into alleged wrongdoing by the four major Australian lenders has revealed that some $297.5 million has been paid out in compensation to customers over the last ten years for poor advice. Firsthand accounts from the public of being charged for financial insight from banks (even when advisers were not assigned to the customer case) or of being fed shoddy or misleading advice from bankers have flooded into the commission in recent months. "Many submissions refer to financial advisers providing advice encouraging Australians to engage in lending they are not capable of servicing over the long term", said Rowena Orr, a barrister at the inquiry.

Deutsche Bank is continuing its senior management shake-up with the appointment of the German lender's head of operations in Ireland to simultaneously become the global head of its securities services division. As a result of the appointment, Fiona Gallagher, who has spent the last 13 years at the bank, will take charge of a further 250 employees, bringing the total number under her direct responsibility to 1,000. In the global position, Ms Gallagher will oversee 30 markets in custody, clearing/settlement and securities lending as well as fund administration for the bank. John Gibbons, Deutsche's global head of transaction banking, spoke of Gallagher's "vast experience and strong leadership".

And finally, in South Africa, two KPMG partners have quit their roles ahead of disciplinary proceedings over an alleged failure to disclose financial interests when auditing VBS (founded in 1982 as Venda Building Society). "When VBS bank recently went into curatorship, information arose in relation to these partners that prompted KPMG to launch an independent investigation, conducted by Bowmans. That investigation is ongoing and further action will be taken as appropriate", a statement from KPMG read.

Avantcard to acquire Tesco's Irish credit card portfolio
Bank of Italy sees economic growth slowing slightly in first quarter
US: signing off on signing credit card receipts

Lafferty Benchmarking

Of the banks mentioned above, Citi, Wells Fargo, BofA and Deutsche were each given two stars in Lafferty's 2017 Benchmarking Report. while JP Morgan was given three stars; the maximum possible number is five stars.

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