Cha-Ching! An Inside Look at Bank Earnings: JPM, C, WFC, PNC and What Lies Ahead
Before the market opened today, the banks we highlighted in our release from last week, reported Q1 earnings to kick off a fairly positive start to earnings season. One could argue that the recent turmoil and worries about the Fed’s aggressive tightening cycle, helped to meaningfully lower the bar for the group. All four of the big banks beat consensus earnings expectations. However, according to Morgan Stanley, net exposure to financials sit just off decade lows and financial shorts in March totaled over $10B.
Q1 Earnings Results
JPMorgan Chase (JPM) reported Q1 EPS of $4.10 vs Factset $3.41 and beat on revenues a quarterly record of $38.35B vs Factset $36.13B. They raised 2023 NII guidance and were considered to be the standout of the group. The stock is currently trading upwards of ~7% on the day.
Citigroup (C) reported Q1 EPS of $1.86 vs Factset $1.65 and beat on revenues $21.45B vs Factset $20.01B. Citi reiterated its 2023 outlook and projects full year revenue to range from $78B to $79B and NII of $45B. The stock is currently trading up on the day at ~4%.
Wells Fargo (WFC) reported Q1 EPS of $1.23 vs Factset $1.13 and slightly missed on revenues $5.60B vs Factset $5.61B. Deposits declined to $1.4B which is down 2% from end of year and 7% from Q1 2022. Wells cited that they continue to see FY23 NII +10% vs 2022 level of $45B. The stock is currently trading slightly down about 0.5%.
PNC Financial (PNC) reported Q1 EPS of $3.98 vs Factset $3.66 and slightly beat on revenues $20.73B vs Factset $20.09B. Faring better than other major regionals in March. Guidance was lowered loan growth and revenue growth. FY23 guidance for revenue was +4.5% y/y vs prior +6-8% and Factset +6.9%. The stock is currently trading down today ~2%.
Bank Earnings Ahead (All Reporting Before Market Open):
Monday: Charles Schwab (SCHW)
Tuesday: Goldman Sachs (GS), Bank of America (BAC) and the Bank of New York Mellon Corp (BK)
Wednesday: Morgan Stanley (MS) and Citizens Financial (CFG) and US Bancorp (USB)
As bears cite that the next shoe to drop is focused around CRE and banks with exposure to office and commercial loans, it will be interesting to see how or if that heightened worry will play out. Overall, regional banks have higher exposure to CRE loans which could lead to a mixed bag on bank earnings this season.
Some other regional banks to watch: Comerica (CMA), Regions Financial (RF), Truist Financial (TFC) and KeyCorp (KEY), and Western Alliance Bancorp (WAL).
First Republic Bank (FRC) has announced it will delay its earnings to April 24th.
