Big banks launched the third-quarter reporting season this week. JPMorgan Chase, Wells Fargo and Citigroup beat earnings early Friday. JPM stock is basing while WFC stock jumped. C stock reversed lower after surging in early trade.
JPMorgan Chase, JPM Stock
Dow Jones giant JPMorgan earnings increased 39% to $4.33 per share on 22% revenue growth to $39.87 billion.
Analysts expected JPMorgan earnings to increase 25.6% to $3.92 per share on $39.57 billion in revenue.
Net interest income increased 30% to $22.73 billion. Non-interest revenue rose 13% to $17.15 billion.
Consumer banking net income increased 36% to $5.9 billion while net revenue increased 29% to $18.4 billion. Excluding the impact from acquiring First Republic earlier this year, consumer banking net income increased 22% while revenue rose 19%.
JPMorgan's corporate and investment bank net revenue eased 2% to $11.7 billion while net income fell 12% to $3.1 billion.
JPMorgan's commercial banking net income increased 105% to $1.9 billion while net revenue jumped 32% to $4 billion. Without First Republic, net income increased 79% while revenue rose 20%.
The bank's asset and wealth management segment saw net income increase 16% to $1.4 billion while net revenue rose 10% to $5 billion. Excluding First Republic net income declined 12% while revenue was flat.
JPMorgan's earnings growth accelerated the past four quarters leading up to the report, spiking 58% to $4.37 per share in Q2. Meanwhile, revenue growth accelerated the past five quarters. JPMorgan posted a 34% revenue gain to $41.3 billion in mid-July.
JPM stock has pulled back about 12% from a late-July high. MarketSmith chart analysis reads the consolidation as a flat base. The stock has notched three weeks of tight weekly closes, a pattern which often marks the low point in a consolidation.
JPM stock surged pared gains to 1.6% Friday after surging 4.5% in early trade. Shares are up 10.4% year-to-date.
Wells Fargo
Wells Fargo earnings increased 72% to $1.48 per share while revenue climbed 6.6% to $20.86 billion.
FactSet saw Wells Fargo earnings jumping 47% to $1.25 per share on 2.9% revenue growth to $20.08 billion.
Net interest income rose 8% to $13.1 billion for the quarter. Noninterest income rose 4% to $7.75 billion.
Wells Fargo posted double-digit earnings gains the last four quarters while revenue growth accelerated the past two quarters prior to the report.
WFC stock swung 3.1% higher Friday.
Wells Fargo shares have been attempting to climb out of a pullback begun in February 2022. The stock remains well below its down-trending 200-day moving average.
Shares faded 0.8% so far in 2023 through Thursday's close.
Citigroup
Citi reported flat earnings at $1.63 per share on 8.8% revenue growth to $20.14 billion.
Wall Street expected the New York-based bank to report a 24.5% earnings decline to $1.23 per share on 4.1% revenue growth to $19.27 billion.
Citi's institutional client group reported a 12% revenue increase to $10.6 billion while the personal banking and wealth management segment generated $6.8 billion in revenue, up 10% year-over-year.
Citi reported double-digit earnings declines in six of the past eight quarters.
C stock is trading near October 2022 levels with shares down 5,8% so far this year. Citi dropped as to 39.14 on Oct. 4 — its lowest level since May 2020.
Shares jumped slipped 0.2% Friday after jumping 3.7% in early trade. Citi stock rose the last six trading sessions leading up to the end of week report.
Analyst Outlooks
Evercore ISI cut its Q3 estimates for brokers, banks and asset managers by an average of 6% last Thursday. The backdrop for the sector remains challenging as the market was down during the quarter and rates were higher. Meanwhile, the brokerage raised its price target on JPM stock to 167, from 158, as investment banking continues to "work through a slow recovery," the firm wrote in a research note.
Elsewhere, Jefferies cut its price targets on JPM stock, WFC and C shares early Tuesday as part of its 2025 bank estimates. Jefferies updated its Federal Reserve rate forecast to reflect two cuts in 2024 and four cuts in 2025. The firm expects net interest income to stabilize in 2024, but there are "tons of other factors" that could impact how and when that stabilization occurs, according to the research note. Jefferies cut its price target on JPM stock to $169 from $176 but maintained a buy rating on shares. The firm has hold ratings for Wells Fargo and Citi. Jefferies lowered its price target on WFC stock to $43 from $48, and docked Citi shares down to $43 from $47.
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