Strong big bank earnings ‘reflect the economy’: BNY Mellon Wealth Management CEO

Max Zahn with Andy Serwer
·3-min read

Blowout earnings from JPMorgan Chase (JPM) and Goldman Sachs (GS) on Wednesday showed record profits as a COVID-19 wave subsided and the economy began to recover earlier this year.

Even scandal-plagued Wells Fargo (WFC) beat Wall Street expectations, reporting nearly $5 billion in profits despite sluggish demand for loans.

In a new interview, BNY Mellon Wealth Management CEO Catherine Keating — who worked at JPMorgan for nearly two decades — said the strong big bank earnings "reflect the economy," which she described as poised for recovery in its early stages of reopening. She credited government stimulus and the ongoing vaccination campaign for growing optimism about the economic outlook.

"The big banks are exposed to the economy," she says. "So you saw a real downturn last year. As the economy went down, you saw banks taking reserves and potential for loan loss provisions." 

"Now you see banks reflecting the economy again," she says. "Turns out, they didn't have as many loan losses as they might have thought; it turns out that as the economy is reopening, there's been a lot of transaction volume."

The big bank earnings reports follow a slew of promising economic data. A blockbuster jobs report released earlier this month showed the economy added 916,00 jobs and the unemployment rate fell to 6% in March. Meanwhile the Institute for Supply Management survey — a measure of U.S. services activity — reached a record high of 63.7 last month.

And on Thursday, new data showed that retail sales soared 9.8% in March.

The initial recovery owes to stimulus measures undertaken by Congress and the Federal Reserve, she says, pointing to elevated savings taken up by U.S. consumers despite the economic downturn.

"In the aggregate, there's an enormous amount of stimulus trying to help the economy and actually higher savings today than we had going into this," Keating says.

"So those are all very, very strong positives for the recovery of the economy," she adds. "And then, of course, we've got the optimism of vaccines and reopening."

Keating spoke to Serwer in an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.

She spent nearly two decades climbing the ranks at JPMorgan, helping the bank weather the Great Recession. In 2014, she jumped to the nonprofit Common Fund, a leading asset manager for endowments and foundations, which she ran until joining BNY Mellon three years ago.

Formerly the chair of the board at her alma mater, Villanova University, she belongs to the Council on Foreign Relations and the Economic Club of New York. 

BNY Mellon Wealth Management CEO Catherine Keating speak with Yahoo Finance Editor-in-Chief Andy Serwer on an episode of
BNY Mellon Wealth Management CEO Catherine Keating speak with Yahoo Finance Editor-in-Chief Andy Serwer on an episode of "Influencers with Andy Serwer."

Speaking to Yahoo Finance, Keating praised the response from the federal government and predicted that the Biden administration's $2 trillion infrastructure proposal could further strengthen the recovery. 

"Our policymakers — whether it's the Federal Reserve, or Congress, the Treasury — have really done a great job for us as a country," she says.

"It's the right thing for the country to invest in the aging infrastructure that we have," she adds. "We think if that is done well, that will be a great boost to the economy."    

Correction: An initial version of this story inaccurately identified Catherine Keating as BNY Mellon CEO. She is the BNY Mellon Wealth Management CEO.

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