Big Banks Earnings Projected to Show $100 Billion in Withdrawals

America’s banking giants are expected to reveal a huge outflow of cash in the days ahead.

As the Financial Times (FT) reported Tuesday (April 11), analysts project that depositors looking for high returns from money market funds and other alternatives withdrew nearly $100 billion from JPMorgan, Bank of America, Citi and Wells Fargo during the first quarter of the year.

Assuming these projections are true, the FT notes, the wave of withdrawals would be in spite of the rush by consumers to move funds from regional banks into larger lenders following the downfall of Silicon Valley Bank (SVB) and Signature Bank.

“The number one, two or three things to watch this quarter are deposits, deposits, deposits,” Jason Goldberg, research analyst at Barclays, told the newspaper.

Three of the four largest banks — Citi, J.P. Morgan and Wells Fargo — will report earnings on Friday, with Bank of America set to do so April 18.

As PYMNTS noted last week, America’s smaller and regional banks have suffered significant fallout from the SVB collapse.

While the country’s 25 biggest banks saw $120 billion in deposits in the days after the California bank’s failure, all banks smaller than those larger financial institutions lost $108 billion. Additionally, money market funds gained more than $220 billion over this span.

“Although the worst of the panic seems to have subsided, there are real fears about whether deposits will continue to fall for these smaller players in the sector,” PYMNTS wrote.

“Not only would that call into question the survival of these financial institutions (FIs), but such a development could jeopardize lending in general, as banks and credit unions of all sizes need deposits to make loans.”

Since the collapse, however, the rush to move funds from smaller banks seems to have eased, with data from the Federal Reserve showing that deposits actually went up for smaller banks in the week ending March 22, to $5.386 trillion from $5.380 trillion the week before.

“We’d hesitate to say that it’s business as usual,” PYMNTS wrote. “But it’s interesting to note that the deposit activity for larger banks shows what seems to be a bit of reversal.”

PYMNTS has also argued that smaller banks may need to go against the current belt-tightening trend and invest in innovations to stem deposit departures.

“Without this pivot, these institutions may not have the necessary tools handy to keep customers coming back and maintain survival, should another crisis hit,” PYMNTS wrote.