Large U.S. banks reporting 1Q22 earnings thus far have diverged in performance based on business models. Although profits were down across the board compared to the very strong results of the prior-year quarter, results were mixed on a sequential-quarter basis. Not surprisingly, U.S. banks benefiting from the acceleration of commercial loan growth and improved net interest income outperformed those with higher capital market exposure, where better than expected trading revenues were partially offset by reduced investment banking activity.

Net revenues were down on a YoY basis versus very strong 1Q21 results for banks such as Citi, JP Morgan, Goldman Sachs, and Morgan Stanley with significant capital markets businesses. Revenues for more lending-oriented, asset-sensitive banks with less capital markets exposure including Bank of America, PNC Financial Services and U.S. Bancorp were more positive.

Management teams generally maintained medium- and longer-term overall revenue, earnings and growth targets despite the economic environment’s continued and potentially growing uncertainty. Management commentary centered around rising inflation, interest rate increases and geopolitical risks that have clouded the outlook for economic growth domestically and globally.