Bigger is better when you’re a bank.

Big banks might contest that assertion depending on the context. For example, big banks like the perks that go along with being big, but not so much the regulatory burden.

As a general rule (it’s almost a tautology), banks expect to reap all the rewards that go along with being large and complex, but would rather be spared the associated annoyances and headaches, particularly those imposed by regulators and lawmakers.

Notwithstanding the cumbersome process of navigating an admittedly labyrinthine (and often redundant) post-GFC compliance regime, being big does often come in handy. During good times, you make a lot of money, for example, as tends to happen when you’re the biggest players in the money business. When the going gets tough, you can come out ok too. During major crises, you’re backstopped by the government. The logic is simple: If you fail, the whole system fails, so you can’t fail. During minor crises, your size, scale, scope and the perception among consumers that you can’t fail, gives you a huge advantage, even if, as Jamie Dimon was keen to emphasize in his annual shareholder letter, nobody in the C-suite at America’s largest banks is excited about stress at smaller institutions.

Q1 results from JPMorgan, Citi and Wells Fargo, all released on Friday, demonstrated the benefits of size, scale, scope and the perception of safety tied to the implicit government backstop. Most obviously, JPMorgan lifted its full-year NII guidance by $7 billion and saw deposits rise from the prior quarter. The shares responded accordingly.

Headed into afternoon trading, JPMorgan was on track for one of its better sessions of the entire post-GFC era.

The bank obviously isn’t alone in reaping the benefits of Fed hikes via higher NII, although the 49% YoY increase at the house of Dimon was the largest among the three majors which reported Friday.

NII jumped 45% at Wells Fargo and more than 20% at Citi. NIM was 104bps higher at Wells versus Q1 of 2022.

For the full year, Wells still projects a 10% bump for NII versus 2022.

Together, JPMorgan, Citi and Wells reported more than $47 billion in net interest income for Q1, up 40% YoY.

That haul came courtesy of the very same Fed hikes which drove up rates on government money market funds and contributed to the unrealized losses which ultimately sank SVB in March. SVB’s failure put a spotlight on small and midsize banks, and particularly on uninsured deposits. Suddenly, the poor risk-reward of holding low-yielding, uninsured deposits in smaller banks compared to high-yielding government paper and repos via money market funds, was top of mind.

Of course, speculation over the Fed’s next move and the turmoil surrounding SVB’s collapse catalyzed more volatility in rates. That appeared to benefit Citi and JPMorgan, both of whom posted better-than-expected FICC revenue for Q1.

Both banks cited strength in rates for a combined $10.2 billion FICC haul, which topped estimates by nearly 10%.

The message is clear enough: America’s largest banks are, in some ways, benefitting both from i) the dynamics which contributed to March’s drama among some smaller lenders, and ii) the drama itself. Obviously, the latter isn’t by design, it’s just a function of the above-mentioned size, scale, scope and perception of safety.

Speaking of large institutions benefitting amid challenging times for smaller firms, Larry Fink weighed in Friday on the deposit-to-MMF substitution effect. “As more and more deposits are leaving and they’re going into ETFs and into any form of cash and money market funds, this type of dislocation is just going to create more and more opportunities for us,” he said, before driving home the point. “I look at the issues that we are seeing today — the market dislocations — as enormous opportunities for BlackRock.”

Later, Fink told Fox Business he sees the Fed hiking rates “two or three” more times. In a Friday note, Mike Mayo said JPMorgan’s results show “Goliath is really really winning.”