First Quarter Bank Earnings Brought The Revival That Wall Street Needed

The first quarter reports officially kicked off with bank earnings, as usual. On Friday, Wells Fargo & Company WFC, JPMorgan Chase & Co JPM and Citigroup Inc C opened the season, reporting strong results. On Monday, they were joined by The Goldman Sachs Group Inc GS who also posted better than expected earnings due to a rebound in global M&A activity that fueled revenue for its biggest division.

Wells Fargo topped estimates with first quarter profit.

Wells Fargo reported revenue rose less than 1% YoY to $20.86 billion, but still topped FactSet’s estimates of $20.2 billion. On the other hand, its net income declined 7% YoY to $4.62 billion or $1.20 per share, but also still surpassed analyst estimates of $1.06. Adjusted profit of $1.26 per share also surpassed LSEG’s estimate of $1.11. However, Wells Fargo’s legal problem is still pending as at the end of February, the bank that spent years trying to extricate itself from its fake accounts scandal, got sued for not doing enough to help harmed customers.

JPMorgan Chase surpassed earnings estimates, but one of its key profit metrics declined on a sequential basis.

For the first quarter, JPMorgan reported revenue rose 8% to $42.55 billion, surpassing LSEG’s estimate of $41.85 billion as interest income rose on the back of higher rates and larger loan balances.

Thanks to its takeover of First Republic, JPMorgan recorded a profit rise of 6% as earnings amounted to $13.42 billion, or $4.44 per share, surpassing LSEG’s estimate of $4.11. Although JPMorgan Chase reported net interest income rose 11% to $23.2 billion, it also contracted 4% on a sequential basis due to margin compression and lower deposit balances.

Citigroup wrapped up its organizational simplification and started 2024 on a good note.

For the first quarter, Citigroup posted revenue dropped 2% YoY to $21.1 billion, surpassing Fact Set’s estimate of $20.4 billion. Revenue contracted mostly as the result of last year’s sale of the overseas division. Due to higher expenses and credit costs, profit also contracted 27% YoY $3.37 billion, or $1.58 a share. Excluding restructuring costs and other one-time items, adjusted earnings amounted to $1.86 per share, also surpassing LSEG’s estimate of $1.23. Most importantly, Citiroup finalized its organizational simplification last month and is now operating under a cleaner management structure.

Goldman Sachs delivered better-than expected results after a challenging year.

For the first quarter, Goldman Sachs reported revenues rose 16.3% to $14.21 billion, surpassing Wall Street’s forecasts of $12.92 billion as investment banking fees rose 32%. The Global Banking & Markets division that covers fixed-income trading and M&A activity, reported a revenue rise of 15%, bringing as much as $9.73 billion to the revenue table. According to LSEG data, overall deal volumes of global M&A activity rose 30% YoY during the quarter to just over $755 billion. Profits rose 28% as net income amounted to $4.1 billion or $11.58 per share, also surpassing FactSet's expectation of $8.56 per share.

With the first quarter results, banks kicked off 2024 with some much-needed momentum fueled by a still-buoyant U.S. economy. But the banking giants also provided a conservative guidance with banking executives emphasizing the uncertainty that lies ahead from macroeconomic, geopolitical, structural, and regulatory challenges despite improved conditions.

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