Earnings Reports

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JPMorgan Chase $JPM, America's largest bank, along with Citigroup $C, PNC Financial $PNC and Wells Fargo $WFC kick off the banking sector's Q118 earnings season on Friday before the market opens with expectations for strong earnings.

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After a chaotic week with US implementing tariffs on China and China's response seeing trade war fears unravelling markets investors are hopeful a focus on earnings fundamentals will comfort equity markets. Overall, analysts and banks are looking for a strong earnings season, partly in response to the corporate tax cut signed into law in December. A volatile, up-and-down week ended on a fearfvul note Friday, with the Dow Jones Industrial Average DJIA, -2.34% finishing the day down 572 points, or 2.3% points, the S&P SPX down -2.19% and the Nasdaq Composite down -2.28%. All three major indexes had weekly losses of greater than 2%.

JPM Morgan Chase Consensus Expectations

Expectations are for EPS to rise 37% to $2.26, on revenue rising 12% to $27.53 billion.

Credit Suisse issued an upbeat note on $JPM Friday saying "JPMorgan is most representative of the value inherent in the universal banking model. Look to JPMorgan for best-in-class execution-sustainable organic revenue growth and market share gains (leveraging the benefits of its complete, scaled and well-integrated product set), a willingness to drive down unit operating costs (capacity for investment to drive incremental growth; a virtuous circle) and an ability to optimize capital; this should sustain better-than-average earnings growth and returns on equity."

$JPM Last Quarter Highlights

  • Earnings figure excludes a $2.4 billion negative impact from the Trump tax cuts
  • Fixed income, credit and currency trading revenue fell 34% to $2.22 billion.
  • Consumer and business banking revenue rose 16% to $5.6 billion.
  • Commercial banking revenue rose 20% to $2.4 billion 
  • Asset and wealth management revenue rose 9% to $3.4 billion. 

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Note: JPM CEO Jamie Dimon is also chairman of the Business Roundtable for the Trump administration. 

JPMorgan Earnings Report Q417 - JPMorgan Wealth Management Kicks Off Strong Bank Earnings

The bank rally has been fueled by expectations for easier regulations including a possible repeal of DoddFrank and infrastructure spending.  The new surge in home prices has also buoyed optimism for the mortgage business and banks profits thereto.

Citigroup Consensus Expectations

Expectations are for an 8% rise in EPS to $1.61, on a 5% revenue jump to $18.94 billion.

$C Last Quarter Highlights

  • Global consumer banking revenue grew 6% to $8.4 billion 
  • International clients group revenue dipped 1% to $8.1 billion
  • Fixed income trading revenue sank 18% to $2.4 billion
  • Banking revenue climbed 14% to $4.7 billion.

Preview of Bite ImageCitigroup Earnings Report Q417 - Citigroup Earnings Beat on Strong Consumer Banking Revenue

PNC Financial Consensus Expectations

Expectations are for a 23.5% jump in EPS to $2.42, on revenues lifting 7.1% to hit $4.16 billion.

$PNC Last Quarter Highlights

  • Average loans grew $1.9 billion, or 1 percent, to $221.1 billion in the fourth quarter compared with the third quarter.
  • Average commercial lending balances increased $1.6 billion reflecting growth across PNC's business credit, real estate, corporate banking and equipment finance businesses.
  • Average consumer lending balances increased $.3 billion as growth in residential mortgage, auto and credit card loans was partially offset by lower home equity and education loans. 

Buybacks

$PNC returned $.09 billion of capital to shareholders in the fourth quarter through repurchases of 3.7 million common shares for $.5 billion and dividends on common shares of $.4 billion

PNC Earnings Report Q417 - PNC Earnings Gain From Fed Interest Rate Rises

Wells Fargo Consensus Expectations

Expectations are for EPS to lift 6% to $1.06, on falling revenue of 2% to $21.67 billion with the Fed action in February to prohibit the bank from growing until it "sufficiently improves its governance and controls."

$WFC Last Quarter Highlights

  • Wells Fargo booked a $3.35 billion after-tax benefit on the tax plan
  • $WFC logged a $3.25 billion pretax charge for litigation expenses.
  • Total loan balance edged up 0.5% from the prior quarter to $956.8 billion, after three straight sequential declines.
  • Community banking revenue rose 3% to $12 billion.
  • Wholesale banking revenue fell 0.8% to $7.09 billion.
  • Wealth and investment management revenue rose 5.7% to $4.3 billion.

Wells Fargo Earnings Report Q417 - Wells Fargo Earnings Still Hampered By Banking Litigation

Bank stocks jumped earlier in the year after the largest U.S. banks passed Fed stress tests and were allowed to raise dividends and share buybacks. The Fed as it raise rates is helping banks' finances giving their earnings a boost. However auto and student loans overhang the banking and finance sectors.

Source: JPM, WFC, PNC, C and AlphaStreet

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