The latest earnings reports of several large U.S. banking groups lend evidence to a recovery in the global financial industry, said a senior official of U.S. banking giant JP Morgan Chase & Co.
Fang Fang, JPMorgan's China managing director and chief executive officer, said in a recent interview with Xinhua that the recovery was largely fragile as the financial crisis was spreading to consumer related business in the United States.
"Generally speaking, we have witnessed some early signs of a recovery in the financial and investment markets, but the recovery is still fragile," he said.
JPMorgan announced last week that it earned 2.14 billion U.S. dollars for the January-March period with record revenue of 26.9 billion dollars.
Fang attributed JPMorgan's solid first quarter results to increased market activity as investors' confidence has been boosted by a series of measures taken by the U.S. government to tackle the financial crisis, including injecting several hundred billion dollars of funds into large banks and other financial institutions.
He noted that JPMorgan also suffered considerable losses at its credit card division as a rising unemployment rate and the deteriorating economy had hampered consumers in the United States.
JPMorgan's card division recorded a loss of 547 million dollars in the first quarter, compared with a profit of 609 million dollars the same period a year earlier.
Fang said JPMorgan's card business witnessed less fees and rising defaults as hard hit U.S. consumers reduced the use of credit card and failed to pay their credit card loans.
Anticipating increasing defaults on consumer related loans, JPMorgan has increased its credit defaults provision by 4.2 billion dollars in the first quarter to 28 billion dollars.
Besides JPMorgan, several other U.S. banking giants also reported solid first quarter results.
Wells Fargo said earlier this month it expected to earn 3 billion dollars in the first quarter, a record number for the company, while Goldman Sachs announced it made a net income of 1.66 billion dollars in the same period.
Given the fact that the financial industry usually starts to recover six months earlier than the broader economy, Fang believed the U.S. economy might hit the bottom and start to grow again in the second half of this year or the first half of next year.
Citing the fact that the share prices of some Chinese real estate companies rose some 60 percent last month in overseas stock markets, Fang said international investors have shown more confidence in the Chinese economy when the financial recovery was emerging.
On the lessons to be drawn from the current financial crisis, Fang said the United States should strengthen financial regulation and take new measures such as setting up different federal government agencies to regulate different financial products, instead of different financial institutions.
He also stressed the need of increasing capital adequacy ratio for financial institutions, reducing the role of rating agencies in financial dealings and implementing anti-cyclical measures to cushion the devastating impact of the crisis on the whole financial system.