Bank profits soar in 2021 but inflation worries cast shadow

Three of the nation’s biggest banks reported blowout profits for 2021 on Friday, helped by the improving economy and consumers and businesses willing to spend and take on loans.

But Inflation is clouding the outlook for 2022, based on comments from bank executives to reporters and industry analysts. They foresee higher inflation this year and are faced with higher costs for compensation as the banks compete for talent and employees. 

“We spent a good deal of 2021 talking about inflation and I suspect we are going to spend even more time in 2022 talking about it,” says Mark Mason, the chief financial officer at Citigroup. 

While JPMorgan reported a 14% decline in fourth-quarter earnings, the bank still brought in nearly $50 billion in profits for the full year, up significantly from a profit of $36.4 billion in 2019, before the pandemic hit.

Citi brought in $21.95 billion last year. That exceeds what Citigroup made in 2006, when the bank earned $21.2 billion at the height of the mortgage bubble and when Citigroup was a financial conglomerate significantly larger than what it is today.

Wells Fargo’s full-year profits were $21.55 billion, slightly below previous records but multiples better than where they were a year earlier. Wells’ operations continue to be restrained by the Federal Reserve, which capped the bank from getting larger after its sales practices problems and other scandals. Read the full story.