JPMorgan and Wells Fargo have announced a raise in their quarterly dividends. This move reflects that the country’s economy is growing at a steady rate. The two banks have registered earnings that have beat Wall Street expectations.
JPMorgan has announced a raise in quarterly dividend by eight cents to 38 cents a share. Wells Fargo raised the existing 22 cents payout per share to 25 cents. Fargo also announced that it has got the necessary approval to raise the dividend to 30 cents a share.
Why this sudden turnaround? It is reported that JPMorgan’s net income saw a 33% year to year jump. While analysts predicted a profit of $1.38 per share, the figure finally stood at $1.59 per share. Following this trend was Wells Fargo. The fourth largest bank reported a 22% increase in its first-quarter operations. Compared to 75 cents a share last year, the bank earned 92 cents a share this quarter.
But amid the good news comes some disappointing announcements. Both banks said that loan growth was sluggish in the first quarter compared to the last quarter of 2012. Also, the banks reported that the interest rates they collect on loans from consumers and rates that they pay are narrowing down. This lead to a fall in their shares prices last week.
What do these developments talk of the country’s banking industry? These signs show that the economy is recovering. Even if loan growth across the industry is not squaring up, there is not much reason to be worried as long as consumers are confident. There has also been a reversal in the country’s housing sector as mortgage lending has jumped 37% from a year ago. Likewise, auto loans grew 10%. However, new business loans plummeted by 20%.
But the good news is that consumers are spending more and sound pessimistic.