Big banks and financial firms kick off third-quarter earnings Friday morning. JPMorgan Chase, Wells Fargo, BlackRock and Bank of New York Mellon topped earnings views. Bank of America, Citigroup and Goldman Sachs follow on Tuesday, with Morgan Stanley reporting Thursday.
JPMorgan
JPMorgan Chase reported earnings of $4.37 per share on $42.7 billion in revenue.
FactSet expected a 7.8% decline in earnings per share to $3.99 per share on about 4% revenue growth to $41.43 billion.
The Dow Jones bank saw assets under management increase by 23% to $3.9 trillion. Net interest income rose 3% to $23.5 billion. Average deposits were down 8% from last year, while average loans rose 1% from 2023.
JPMorgan increased its provision for credit losses to $3.1 billion, from $1.38 billion for the same quarter last year.
The bank expects full-year net interest income of $92.5 billion, ahead of FactSet views for $91 billion.
JPMorgan shares jumped 4.4% Friday.
JPM stock reclaimed its 10-week moving average this week after trading below support at that level over the last three weeks.
Shares are trading in a flat base with a 225.48 buy point, matching its record high from Aug. 30. JPMorgan rallied 30.7% so far this year.
Wells Fargo
Wells Fargo earnings per share fell to $1.42 per share, beating expectations for a 13.5% decline to $1.28. Revenue slid about 2% to $20.37 billion, just below forecasts for $20.4 billion.
Net interest income fell 11% from last year to $11.7 billion. Average loans were down 3% while average deposits were stable at $1.3 trillion. Wells Fargo lowered its credit loss provisions to $1.07 billion from $1.2 billion last year.
The bank guided a 9% decline for 2024 net interest income from its 2023 level of $52.4 billion.
Wells Fargo shares surged 5.6% Friday.
WFC stock is consolidating with a 62.55 buy point.
Wells Fargo rebounded above its 50-day moving average and 200-day line on Oct. 4.
The stock is up about 24% in 2024.
BlackRock
BlackRock reported earnings of $11.46 per share adjusted, up 5% from last year, which beat forecasts for a decline to $10.36 per share. Revenue increased 15% to $5.2 billion, also beating expectations for $5 billion.
Assets under management rose 26% to $11.5 trillion. BlackRock saw record quarterly net inflows of $221 billion, representing 8% organic asset growth.
BlackRock stock climbed 3.7% Friday, pushing to a new record high.
Shares cleared their prior all-time high of 973.16 from November 2021 on the move.
BlackRock leapt 22% this year and is extended following a mid-July breakout.
BNY
Bank of New York Mellon announced adjusted earnings of $1.52 per share, which cleared expectations for a 15.6% increase to $1.41 per share. Total revenue rose 5% to $4.6 billion, edging out forecasts for $4.54 billion.
Net interest income rose 3% to $1.05 billion.
Assets under management increased 18% from last year to f$2.1 trillion. BNY allotted $23 million in provisions for credit losses during the quarter, after not announcing any in Q3 2023.
Bank of New York shares inched lower Friday.
BK stock has rallied 43% in 2024 and is trading at record highs.
Bank Earnings Forecasts
Goldman Sachs in an Oct. 1 earnings preview for banks said it expects net income to fall by an average of 4% in Q3, The Fly reported. Deposits and loan growth will more than outweigh fixed asset repricing, Goldman estimates, and the firm doesn't expect net interest income to inflect until Q2 2025. Meanwhile, Goldman said there are still concerns around credit card and commercial real estate charge-offs, although those have moderated in recent months. Still, bank reserve builds could continue.
FactSet consensus shows the overall financial sector reporting a 0.4% earnings decline vs. last year, with banks leading that decline.
Elsewhere, Bank of America in a Monday note said that the Fed's emerging rate-cutting cycle is a positive for U.S. banks. "Rate cuts that lead to rebounding customer activity and a positively sloping yield curve (are) structurally bullish" for bank stocks, the analysts wrote. Such a rebound would drive "positive EPS revisions and a further rerating higher in bank stock valuations."
However, Bank of America still prefers regional banks on their potential to defend net interest income. Among money-center banks, the analysts forecast Morgan Stanley and Goldman Sachs will benefit most from a rebound in investment banking activity, which would drive positive earnings revisions.
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