Citigroup led Friday morning's bank results with a positive surprise for analysts. Wells Fargo missed second quarter estimates and PNC Financial fell just short on revenue expectations. C stock jumped more than 13% during the trading day. WFC stock closed up 6.17% and PNC stock recovered from its slide to end Friday up 1.6%.
WFC Stock Results
Wells Fargo came in well below Wall Street forecasts for earnings and revenue. WFC reported earnings of 74 cents per share, a 46% decline year over year. Revenue for the period was $17.03 billion, down from $20.27 billion in 2021. Analysts were expecting WFC earnings of 83 cents per share on $17.5 billion of revenue.
WFC's earnings included an impairment of 8 cents per share related to its affiliate VC business. Excluding the impairment, EPS was 82 cents per share, just shy of analyst estimates.
"While our net income declined in the second quarter, our underlying results reflected our improving earnings capacity with expenses declining and rising interest rates driving strong net interest income growth," CEO Charlie Scharf said. High interest rates and weaker financial markets caused VC, mortgage banking and investment banking revenue to decline, he said.
Wells Fargo set aside $580 million in loan provisions after releasing $1.26 billion in loan reserves in 2021.
Scharf says WFC should continue to benefit from rising interest rates. While he expects credit losses to increase he said, "we have yet to see any meaningful deterioration in either our consumer or commercial portfolios."
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C Stock Results
Citigroup's results were a positive surprise for analysts. EPS fell to $2.19 per share, down 23% from the $2.85 recorded last year. Revenue for the quarter was $19.6 billion, up 11% year over year. Wall Street was bracing for a 41% earnings drop and only 5% revenue growth.
"In a challenging macro and geopolitical environment, our team delivered solid results and we are in a strong position to weather uncertain times, given our liquidity, credit quality and reserve levels," CEO Jane Fraser said.
Citigroup's revenue growth was driven by rising interest rates and client activity in its markets segment. C's institutional clients revenue increased 20% over the yeah to $11.4 billion. But it was partially offset by a 46% drop in investment banking revenue to $805 million.
Citigroup increased its allowance for credit losses to $400 million, compared to a release of $2.4 billion during the period last year.
PNC Stock Results
PNC Financial topped analyst earnings expectations but fell short on revenue. Earnings were $3.39 per share, up 39% over the year. Revenues were $5.12 billion, which were up 9.6%. Analysts hoped PNC would be a bright spot for the broader disappointing bank earnings. Wall Street expected EPS to jump 29% to $3.14 and revenue to grow 9% to $5.13 billion.
"PNC had a very strong second quarter," CEO Bill Demchak said in the announcement. Loan growth exceeded the bank's expectations, net interest income and interest margin increased and the company's expenses are well-managed, he says.
Provisions for credit losses were $36 million, down from $302 million in 2021. In Q1 2022, PNC released $208 million of loan reserves.
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