reported a 34% drop in quarterly profit on Tuesday, as rock-bottom interest rates and a slowdown in loan demand outweighed the boost from a surge in financial market trading.A 16% jump in trading fees somewhat offset a shrinking loan book and bullish results from U.S. peer JPMorgan Chase & CoBond trading revenue rose 18% from a year earlier, while equities trading increased 15%.
The U.S. Federal Reserve cut interest rates to near zero in March in an emergency move to help shore up the economy and has kept it unchanged since then, crimping banks’ lending margins and their ability to grow revenue. Expenses rose 5%, primarily due to a $400 million fine tied to risk-and-control failures across the sprawling international bank. Executives have committed $1 billion to overhauling its operations systems.
The bank further boosted reserves for potential loan losses as coronavirus cases rise around the world crippling local economies. The third-largest U.S. bank by assets set aside an additional $314 million on top of the $15 billion it reserved in the first half of the year.
Banks need a reasonable interest leverage to survive. The bone heads at the central banks are hopelessly useless in understanding this simply reality of business.
Cant even give money away.
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