By Michelle Price and Matt Scuffham

WASHINGTON, (Reuters) – Some banks in the United States have started to stockpile cash again to offset potential loan losses. This is due to increasing concerns over Ukraine’s war and the effect of inflation on the U.S. Economy. However trading remains a bright spot for Wall Street.

JPMorgan Chase & Co (NYSE:), Goldman Sachs Group Inc (NYSE 🙂 Citigroup The banks reported that Inc (NYSE) had combined credit loss reserves of $3.36 billion for the first quarter.

The move is markedly different from 12 months ago, when reserves were released by lenders after COVID-19 related losses had failed to materialize. This signals that lenders fear the global economic recovery may not be sustainable as the Ukraine conflict and inflation continue to roil markets.

Citigroup, the largest U.S. bank by global reach, absorbed $1.9 billion in additional reserves due to Russia’s exposure and wider macroeconomic effects. According to bank executives, Russia exposure could cause it to lose between $2.5 and $3 billion.

JPMorgan, America’s biggest lender, added $902 Million to its reserves on Wednesday. This was due to “the possibility of downside risks due high inflation and war in Ukraine” as well as the accounting for Russia-associated exposure. The company has stated that it may lose $1 billion over the long-term on Russia-related exposure.

Goldman, who also mentioned “macroeconomical and geopolitical concern” as the reasons for $561m in provision, said it will be taking a $300m first-quarter hit on Russia.

Analysts said that a high inflation rate could impact consumer spending and aggressive Federal Reserve interest rate increases aimed at reining in prices would likely slow loan growth.

According to the OECD, war in Ukraine or Western sanctions could reduce global growth by more than 1% and increase inflation by two-and-a-half percentage points.

Still, some banks like Morgan StanleyN> and Wells Fargo (NYSE:) & Co have little direct Russia exposure. Wells Fargo released pandemic reserve funds of $1.1 billion, which is a bank that is primarily domestically focused and has a limited capital markets operation.

Charles Scharf (Wells Chief Executive) warned that the outlook for the economy is changing. However, he noted that rates hikes would “certainly” decrease growth. He added that the war in Ukraine poses additional risks to the upside.

Citi was up almost 2% while Wells Fargo’s share price fell 6%

TRADING, M&A

However, the bank’s trading business performed much better than anticipated by analysts as clients adjusted portfolios to accommodate rate rises and the war.

The analysts had predicted a drop in trading revenue of between 10% and 15% for all trading channels compared to 2021, when the central bank made moves to boost the economy during the pandemic. This led to record-breaking equity indexes that drove an unprecedented trading boom across Wall Street.

Goldman Sachs reported that global market revenues increased 4% in the first quarter, driven by an 21% increase in fixed income revenue. Morgan Stanley (NYSE)’s total trading revenue dropped just 6%. They saw their share prices rise by 1.3% or 2.7%, respectively. L3N2WC2E1][L3N2WC2EO]

On a conference phone call, Chief Executive James Gorman stated that equity and fixed income had again produced exceptional results. He said this in support of global clients against a challenging backdrop.

JPMorgan reported on Tuesday a stronger-than-expected performance in trading, and overall market revenues were down only 3% over last year.

However, equity underwriting fees fell as stock market listings declined due to volatility. Morgan Stanley and Goldman Sachs reported a 83% decrease in equity-underwriting revenues.

The picture for the M&A advisory business was mixed. Although pipelines were healthy according to executives, certain companies are putting off transactions until the markets stabilize. Some transactions that had been initiated before war ended up being completed within the first quarter.

Morgan Stanley said advisory revenues nearly doubled from a year ago driven by completed M&A transactions. Goldman Sachs reported that revenues from its advisory businesses had remained “essentially the same.”