NEW YORK: Top U.S. banks must make deeper cost cuts to drive earnings growth, with revenue expected to remain under pressure for the foreseeable future, analysts said.
Some of the banks warned that growth in their net interest income, the difference between what they earn on loans and pay on deposits, will slow in 2019 thanks to a flatter yield curve and a moderating economy. The Federal Reserve in March signaled that it unlikely to raise interest rates this year. "Credit can only really get worse from here," he said."That is going to be a headwind at some point and all the more reason for the banks to be trying to control their expenses."
JPMorgan was the only big U.S. bank that increased expenses as it spent more on technology, hiring bankers and marketing. "Going forward it's going to be a function of markets," Morgan Stanley's Chief Financial Officer Jonathan Pruzan said in an interview on Wednesday."Confidence is reasonably good and stock markets are reasonably stable."
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