Q1 Bank Earnings Bring Needed Revival to Wall Street

As usual, the first quarter officially kicked off with bank earnings reports. On Friday, Wells Fargo & Co (NYSE:WFC), JPMorgan Chase & Co (NYSE:JPM), and Citigroup Inc (NYSE:C) kicked off the quarter by announcing strong industry results. On Monday, Goldman Sachs Group Inc (NYSE:GS) also reported better-than-expected earnings, as a rebound in global takeover activity boosted revenue in its largest division.

Wells Fargo's first-quarter profit beat expectations.

Wells Fargo reported revenue growth of less than 11 TP3T year-over-year to $20.86 billion, but still above FactSet's forecast of $20.2 billion. On the other hand, net income fell 7% year-on-year to $4.62 billion, or $1.20 per share, but still beat analysts' estimates of $1.06 per share. Adjusted earnings of $1.26 per share also beat LSEG's estimate of $1.11. However, Wells Fargo's legal problems remained unresolved, as in late February the bank, which has spent years trying to shake off the phony account scandal, was sued for not doing enough to help victimized customers.

JPMorgan Chase beat earnings estimates, but one of its key profit metrics fell sequentially.

In the first quarter, JPMorgan's revenues grew 8% to $42.55 billion, exceeding LSEG's estimate of $41.85 billion, due to higher interest income from interest rate hikes and higher loan balances.

As a result of the acquisition of First Republic Bank, JPMorgan Chase's profits grew by 61 TP3T to $13.42 billion, or $4.44 per share, beating the LSEG's estimate of $4.11 per share. Although JPMorgan Chase's net interest income grew 111 TP3T to $23.2 billion, it also contracted sequentially by 41 TP3T as a result of margin compression and lower deposit balances.

Citigroup completed its organizational simplification and started 2024 on a positive note.

In the first quarter, Citi's revenue fell 2% year-over-year to $21.1 billion, beating Fact Set's estimate of $20.4 billion. The main reason for the revenue contraction was the sale of overseas divisions last year. Profit was also down 27% year-on-year to US$3.37bn, or US$1.58 per share, due to higher expenses and credit costs. Adjusted EPS, which excludes restructuring costs and other one-time items, came in at $1.86 per share, also exceeding LSEG's estimate of $1.23 per share. Most importantly, Citi completed its organizational streamlining last month and is now operating under a leaner Gwen structure.

After a challenging year, Goldman Sachs' results were better than expected.

Goldman Sachs' revenues rose 16.31 TP3T to $14.21 billion in the first quarter, beating Wall Street forecasts of $12.92 billion, as investment banking fees rose 321 TP3T, and the Global Banking and Markets group, which is responsible for fixed-income trading and buyout activities, grew 15.1 TP3T, with revenues of $9.73 billion. According to the London Stock Exchange Group (LSEG), total aggregate volume of global buyout activity increased by 301 TP3T year-on-year to just over $755 billion in the quarter. Profit increased 281 TP3T, with net income reaching $4.1 billion, or $11.58 per share, also exceeding FactSet's estimate of $8.56 per share.

With the release of the first-quarter results, the banking sector has provided some much-needed momentum for 2024, driven by a still-strong U.S. economy. However, the banking giants also provided conservative guidance, with banking executives emphasizing that despite the improvement, macroeconomic, geopolitical, structural and regulatory challenges remain uncertainties for the future.

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This article is from an unpaid outside contributor. This article does not represent reporting by Benzinga and has not been edited for content or accuracy.

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