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The Federal Reserve giveth, and it taketh away. 

Most investors these days are focused on the Fed's giving -- as in cutting interest rates to stimulate the U.S. economy, potentially driving record stock prices even higher. 

But at JP Morgan Chase (JPM) , Citigroup (C) and other giant U.S. banks, executives are starting to grapple with the likelihood that lower interest rates could hit lending revenue by forcing them to cut rates on loans.

Mark Mason, Citigroup's CFO, told journalists on a conference call that its quarterly lending revenue would be about $50 million lower if the Federal Reserve cuts official U.S. interest rates by 0.25 percentage point.   

Net interest revenue -- what the bank collects on loans and bonds minus what it pays out on deposits and other funds -- rose to $12 billion in the second quarter, up 2% from a year earlier.

But the increase was driven largely by loan growth; the New York bank is already starting to see pressure on its lending margins, which narrowed to 2.67% in the second quarter from 2.72% in the first quarter and 2.7% in second-quarter 2018. 

"The impact of lower rates was evident in earning-asset yields," according to analysts with brokerage firm Keefe, Bruyette & Woods, which specializes in financial companies. Deposit costs also surged more than analysts had projected. 

Overall, Citigroup said, net income for the three months ending in June was $4.8 billion, a 6.6% increase from the year-earlier period. 

But the earnings growth stemmed largely from a $350 million one-time gain linked to an investment in Tradeweb Markets, which sold shares via an initial public offering in April.

The consternation about lower rates represents a turnaround from the tone this time last year, when bank investors were ebullient because the Fed was raising rates -- hailed by Wall Street analysts as a harbinger of higher lending profits for years to come.

Instead, a slowing U.S. economy in 2019 has brought the Fed to the point of considering interest rate cuts as soon as this month.

JPMorgan Chase, Citigroup and Goldman Sachs are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stocks? Learn more now.

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