Big Banks Talk Bucks as Q2 Earnings Season Kicks Off
This week’s earning season kicked off with the first round of Q2 results from the banking sector which has mostly underwhelmed. Early takeaways have not flagged anything particularly controversial however, as it relates to the sector, FactSet has noted that although the bigger banks have outperformed this year, they have lagged the depressed regional names amid the broader rotational dynamics surrounding the post-CPI trade.
Wells Fargo (WFC) came under pressure as their miss on net interest income (NII) became the focus for investors. Additionally, the company lowered its NII guidance toward the lower end of its prior outlook (8-9%). Furthermore, management reiterated their reminder of the company’s current outstanding litigation regulatory, and customer remediation matters that could impact operating losses.
Other big bank, JP Morgan (JPM) beat Q2 estimates as EPS came in at $6.12 vs FactSet $5.88 while revenues also beat by about $8M ($50.2Bn vs FactSet $42.2Bn) which was led by investment banking. The company noted that $1.80 of the $6.12 reported EPS was the result of the impact of Visa exchange offer resulting in nearly $7B in gains, which was partially offset by $546M in securities losses.
Citigroup (C) beat Q2 EPS estimates as it was cited at $1.52 vs FactSet $1.39 while revenues came in line at $20.14Bn vs FactSet $20.07Bn. As it relates to guidance the company intends to buy back $1Bn in common shares and increase its dividend to $0.56 per share in Q3 2024. In the longer-term, management’s goals are to reduce capital requirements, continue to invest in transformation and technology to modernize operations and to mange its expenses toward $51Bn-$53Bn by 2026.
Next week’s bank reports include: Blackrock, Inc. (BLK), Goldman Sachs Group, Inc. (GS), The PNC Financial Group (PNC), Bank of America Corp. (BAC) and Morgan Stanley (MS).
