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 Q218 earnings season on Friday before the market opens with expectations for strong earnings.

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After a chaotic month with Fed stress test results, 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. The earnings come after a euphoric week after a strong June jobs report and a market running without fear.

JPM Morgan Chase Consensus Expectations

Expectations are for EPS of $2.22, on revenue of $27.44 billion.

Credit Suisse issued an upbeat note on $JPM last quarter 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

  • Trading revenue rose 15%, or 7% excluding a one-off gain, fueled by equity trading.
  • Investment banking down 7%, below some estimates.
  • Credit card sales volumes grew 12% 
  • Merchant processing volume up 15%.

JPMorgan Chase CEO Jamie Dimon said: "2018 is off to a good start with our businesses performing well across the board, driving strong top-line growth and building on the momentum from last year.

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

Previous Quarter 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 EPS of $1.57, on $18.53 billion in revenue

$C Last Quarter Highlights

  • Global consumer banking revenue rose 7%,
  • Institutional clients revenue rose 6%,
  • Fixed income market revenue down 7%
  • Equity markets revenue surge 38%.

Previous Quarter Earnings

PNC Financial Consensus Expectations

Expectations are for EPS to $2.58, on revenues of $4.16 billion.

$PNC Last Quarter Highlights

  • Corporate and Institutional Banking on a year-over-year basis, quarterly net income improved 20.1%
  • Asset Management on a year-over-year basis, quarterly net income improved 44.7%
  • Retail Banking on a year-over-year basis, quarterly net income improved 3.6%.
  • BlackRock segment’s net income declined 11.8% from the prior-year quarter.

Previous Quarter Earnings

Wells Fargo Consensus Expectations

Expectations are for EPS to lift 6% to $1.12, on revenue of  $21.66 billion. The Fed took action in February to prohibit the bank from growing until it "sufficiently improves its governance and controls."

$WFC Last Quarter Highlights

  • Community banking revenue flat at $11.3 billion
  • Wholesale banking revenue fell 4% to $7.28 billion.
  • Net interest income fell 1% to $12.2 billion.
  • Total loan balance was down 1.2% to $947.3 billion. Average deposits fell by $2 billion or 0.5% to $1.3 trillion

Previous Quarter Earnings

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

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