A quick run-through of the first-quarter results from the US banks suggests a clean sweep of better-than-expected revenue and earnings, yet that didn’t translate into a rise in their share prices.

First to report was JPMorgan Chase (JPM:NYSE), which smashed earnings forecasts due to the strong underlying performance of all of its businesses.

Chief executive Jamie Dimon described the economic outlook as favourable but warned inflation and geopolitical tensions weren’t going away, on top of which in his view the US still hasn’t experienced the full effects of the Federal Reserve’s tightening yet.

This caution fed through into the firm’s second-quarter net interest income guidance, which remained unchanged, causing the shares to fall 6%, their biggest one-day loss in four years.

Rival Wells Fargo (WFC:NYSE) also saw its shares slide following its first-quarter update, despite earnings comfortably beating Wall Street estimates, after it revealed a sharp drop in net interest income as customers shifted to higher-yielding deposit products.

Having reaped billions of dollars in excess profits thanks to the unprecedented rise in interest rates, it appears the banks are finally having to pass on better savings rates to depositors, thereby eating into margins, or risk losing customers.

Citigroup (C:NYSE) shares also slipped after it reported a drop of more than 25% in net income due to higher operating expenses and higher credit costs in the shape of growing losses on credit card lending.

This suggests consumers’ balance sheets aren’t as robust as the market thinks, which would tie in with Jamie Dimon’s comments on the effects of higher rates still working their way through the economy.

On the other side of the ledger there were positive performances from Goldman Sachs (GS:NYSE), whose core equity and fixed-income trading operations produced blockbuster results sending the shares up 3%, and from Bank of America (BAC:NYSE) which posted a drop in revenue but also turned in a strong result from its investment banking business. 

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