By Mehnaz Yasmin and Niket Nishant
(Reuters) - JPMorgan Chase & Co (NYSE:JPM) on Friday reported a surge in deposits in the first quarter, as the sudden collapse of two U.S. regional banks in March drove customers to move their money to bigger lenders.
The largest U.S. lender gained $50 billion in deposits at the end of March, its first-quarter earnings report showed. That compares to Citigroup Inc (NYSE:C), where deposits were largely flat, and a decline at Wells Fargo (NYSE:WFC) & Co.
JPMorgan's finance chief, Jeremy Barnum, said he expects modest outflows in deposits for the rest of the year.
JPMorgan eclipses rivals with Q1 deposits growth https://www.reuters.com/graphics/USA%20BANKS-RESULTS/akveqnjwavr/chart.png
Analysts are watching bank balance sheets to assess how easily lenders can fund their operations and whether they have enough cushion to handle any financial shocks.
"Investors are scrutinizing various aspects of bank deposit bases to assess funding profiles, net interest margin (NIM) pressures and overall liquidity," Autonomous Research analysts led by John McDonald wrote in a March note.
Investors have closely scrutinized deposits after the collapses of Silicon Valley Bank and Signature Bank (OTC:SBNY) last month rattled markets, prompting regulators to step in to guarantee their customers' deposits.
The three banking giants received an influx of money in March. JPMorgan reported a 2% rise in deposits to $2.38 trillion at the end of the quarter compared with the end of 2022.
While Citigroup's deposits were little changed at $1.33 trillion at the end of the first quarter, CFO Mark Mason said it saw a "meaningful deposit inflow" related to the turmoil.
Deposits at Wells Fargo slid 2% to $1.36 trillion as customers moved their money to higher-yielding accounts and products.
Industry-wide consumer deposits are expected to decline over the next several months due to inflation and a looming recession, Stephen Beck, founder and managing partner of cg42, a consulting firm in New York, said in an email Friday.
Deposits to loans in U.S. banking system https://www.reuters.com/graphics/US%20BANKS-DEPOSITS/CHART/mypmojqlrpr/chart.png