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Wall Street big bank’s quarterly results: Unanticipated Ups and Downs!

Autor: Financial Market
3 min

Earnings season in the United States kicked off at the end of this week with companies in the financial and asset management sectors alongside the healthcare sector.

Thus, large banks such as JP Morgan, Wells Fargo, Citi Group or the largest asset manager in the world, BlackRock, reported unexpected results both on growth and decline.

JPMorgan Chase reported better than expected second-quarter results with a 67% increase in net profit compared to Q2 2022, driven by higher interest payments from borrowers and the acquisition of First Republic Bank.

The bank’s net interest income rose significantly, bolstered by the purchase of First Republic. CEO Jamie Dimon reassured investors about the resilience of the economy but highlighted risks such as consumer cash buffers, high inflation, and the war in Ukraine.

JPMorgan’s quarterly profit reached $14.47 billion, or $4.75 per share, compared to $8.65 billion, or $2.76 per share, in the same period last year.

The bank’s consumer banking and investment banking divisions showed strength, while investment banks, in general, have been cutting costs due to sluggish trading revenues.

Key financials:

• Net Income: $14.5 billion, an increase of 67% compared to the Q2 2022.
• Total Revenue: $42.4 billion,compared to the $31.6 billion the same period last year.
• Earnings per Share (EPS): $4.75 compared to the $3,83 expected
• Total deposits $2.40 t, est. $2.44 t

Wells Fargo (WFC.US)

Similarly, shares of Wells Fargo are gaining after a 57% surge in second-quarter profit, driven by increased customer interest payments and a higher annual forecast for net interest income.

The bank’s net interest income climbed 29% to $13.16 billion as borrowing costs rose following rate hikes by the U.S. Federal Reserve. Wells Fargo raised its net interest income forecast by 14%, expecting it to exceed last year’s $45 billion.

The provision for credit losses, including potential losses in commercial real estate office loans, increased to $1.71 billion. Despite the positive results, Wells Fargo is still operating under an asset cap, limiting its growth until regulatory concerns are addressed.

Key financials:

Net Income: $4.9 billion, an increase of 57% compared to Q2 2022.
Total Revenue: $20.5 billion, up 21% from the same period last year.
Earnings per Share (EPS): $1.25, compared to the $1,16 expected
Total avg. deposits $1.35t.

Citigroup (C.US)

Citigroup’s profits fell by over a third in the last quarter, affected by slower corporate spending, fewer deals, and a costly round of layoffs.

The bank reported a net income of $2.9 billion, down from $4.5 billion in the same period last year, with revenues dipping 1% to $19.4 billion.

The bank’s corporate and investment banking revenue fell 44%, and fees from its markets business dropped 13%. Despite these challenges, Citigroup’s retail credit card business saw a 27% rise in revenue, helping the bank’s overall profits exceed Wall Street’s expectations.

However, with the Federal Reserve’s intent to continue raising interest rates, Citigroup anticipates more loans will sour, leading to a nearly 40% increase in its provision for loan losses to $1.8 billion. CEO Jane Fraser, who has been leading a restructuring effort since 2021, continues to guide the bank in its recovery from the financial crisis.

Key financials:

Net Income: $2.9 billion, compared to the $4,55 billion last year
Total Revenue: $19.48 billion, compared to the $19.3 billion expected
Earnings per Share (EPS): $1.31, compared to the $1,32 expected
Total deposits $1.32t

At the same time, the world’s largest asset management group, BlackRock, reported net income of $1.4 billion in the second quarter, a 27% increase over the same period last year, even though total revenue fell 1 percent year-over-year to $4.5 billion, and operating income fell 3 percent.

Assets under management benefited from strong performance from several technology stocks that led to a rally in the benchmark S&P 500, with net inflows in the quarter exceeding $80 billion, but below analysts’ expectations of $92 billion .

BlackRock’s rise in profits comes as rival asset managers grapple with shrinking margins and increased competition.

BlackRock reported diluted earnings per share of $9.06, up 28% from a year earlier. The adjusted figure of $9.28 was above the $8.41 expected by analysts polled by Bloomberg.

Revenue from the group’s Aladdin risk management system and other technology services rose 8% year-on-year to $359 million, beating expectations.

BlackRock expects investment in bond funds to pick up once the Federal Reserve halts the pace of interest rate hikes and has already reported that assets under management have now reached $9.4 billion, up 11% from Q2 last year .