Bank Stocks Mixed As JPMorgan, Wells Fargo Report

Bank Stocks Mixed As JPMorgan, Wells Fargo Report

Banks and major financial firms kicked off the quarterly reporting season in a flurry this week with JPMorgan Chase, Wells Fargo, Citigroup (C), BlackRock and State Street (STT) all reporting early Friday. Financial stocks were mixed Friday morning as earnings rolled in. Bank have generally traded tight, just off their recent peaks.




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UBS last Thursday raised its price targets on the reporting banks, noting a nice run for bank stocks coming out of the Q1 conference season, The Fly reported. Investors have “breathed a sigh of relief” over the lack of major revisions to net interest income outlooks. But UBS says there could be downward revisions still ahead if the odds of a Federal Reserve rate cut dwindle.

Meanwhile, Seaport Research last Thursday in a preview for financial earnings noted improving trends across investment banking, asset management and deposits, which should drive earnings increases in 2025. However, Seaport noted that Q1 results will take a hit from FDIC special assessment charges and the buildup of reserve provisions for credit cards. The firm also raised its price targets for the reporting banks.

Analysts forecast net interest income to rise for JPMorgan and Citi on a year-over-year basis but tick down from Q4.

JPMorgan Chase

Dow Jones member JPMorgan‘s (JPM) reported a 7.6% earnings increase $4.44 per share. The quarterly earnings included a 19 cent decrease due to the FDIC special assessment. Adjusted earnings for the quarter were $4.63 per share. The bank reported net revenues rose 9% to $41.93 billion.

FactSet analysts expected earnings to increase 1.7% to $4.17 per share on 8.7% revenue growth to $41.69 billion.

Net interest rose 11% year-over-year to $23.08 billion, but declined from $24.05 billion in the fourth quarter.

Provisions for credit losses fell to $1.88 billion, from $2.76 billion in Q4 and $2.28 billion in Q1 2023, respectively.

JPMorgan’s earnings and revenue growth both slowed over the past two quarters.

JPM stock retreated 2.5% early Friday and is poised to drop below support at its 21-day exponential moving average. Shares on Thursday eased a fraction, to less than 3% below the April 1 high.

The stock has rallied 14.9% so far this year.

Wells Fargo

Wells Fargo (WFC) reported a 2.3% earnings decline to $1.20 per share while total revenue rose about 1% to $20.86 billion.

Analysts predicted earnings to fall 13.8% to $1.06 per share on a 2.5% revenue decline to $20.19 billion.

Net interest income decreased 8% year-over-year to $12.23 billion. Wall Street predicted net interest income to fall  7.8% year over year to $12.37 billion, and down from $12.77 billion from last quarter.

The bank’s provision for credit losses decreased 22% year-over-year to $938 million, also down from $1.28 billion in Q4.

Wells Fargo’s earnings fell over the last three quarters to a 16% drop in Q4 from a 51% increase in the second quarter.

WFC stock was little-changed early Friday, trading just below its 21-day line.

Wells Fargo hit a two-year high of 58.44 on March 13 following its Jan. 30 breakout. The stock has consolidated gains over the past two weeks, narrowing the distance to its 50-day moving average. Shares are 3% off their March 13 high.

WFC stock climbed 15.2% in 2024.

Citi

Citi reported a nearly 28% decrease in earnings to $1.58 per share. Revenue slid 2% year-over-year to $21.1 billion.

Analysts predicted earnings to fall 46% to $1.18 per share while revenue declined 4.6% to $20.46 billion.

Net interest income rose 16% year-over-year to $594 million, also up 7% from last quarter.

The bank’s revenue growth declined over the past three quarters to a 31% gain in Q4 from a 75% increase in Q1 2023.

C stock peaked at 63.90 on April 1, the highest level for the bank stock since February 2022, after a March 7 breakout.

Citi rallied more than 10% on the breakout but has fallen back to just 3% above the 57.95 buy point.

Shares rose 1.6% Friday, adding to their slight gain Thursday, finding support at their 21-day line. C stock has jumped 18% year to date.

BlackRock, State Street

BlackRock (BLK) reported a 24% increase in adjusted earnings to $9.81 per share while revenue rose 11% to $4.73 billion. Diluted earnings increased 37% to $10.48 per share.

FactSet expected BlackRock’s adjusted earnings to jump 18% to $9.39 per share on 9.6% revenue growth to $4.65 billion.

Assets under management increased 15% year-over-year to a record $10.47 trillion.

BlackRock’s earnings growth slowed over the past two quarters. Revenue has accelerated over that period.

Elsewhere, BlackRock’s Larry Fink faces a proxy vote to split his chairman and CEO roles following a challenge from activist investor Bluebell Capital Partners, the Financial Times reported last Friday. The activists claim that BlackRock’s 17-member board is too large and that there has been a failure to provide independent oversight of management. Voting on the matter will take place on May 15 during BlackRock’s annual meeting.

BLK stock swung 2.7% higher early Friday to close in on its 50-day line. BlackRock is trading 5% below an 819 buy point for a flat base following its Feb. 23 breakout.

A decline of 7% or more below the buy point triggers the automatic sell rule. Shares on April 4 tumbled below their 50-day line on a 101% spike in daily trade volume, which is also a sell indicator.

State Street

State Street reported earnings declined 10% year-over-year to $1.37 per share. Excluding notable charges, adjusted earnings for the quarter $1.69 per share.

Wall Street expected adjusted earnings to ease 1.3% to $1.50 per share while total revenue ticked down the same amount to $3.06 billion.

Assets under management jumped 20% from last year to a record $4.34 trillion.

The company’s earnings and revenue fell the past two quarters, although the declines have slowed.

STT stock rose 1.6% Friday morning. Shares pared their decline to 0.6% Thursday.

State Street shares are down 4.6% so far this year, as are some other bank stocks, testing support at their 50-day moving average.

Meanwhile, regulators are probing BlackRock, State Street and Vanguard over their influence on U.S. banks, the Wall Street Journal reported on April 2. Regulators want to ensure the firms, which manage more than $23 trillion in assets, maintain a passive role regarding their investments. BlackRock and Vanguard each hold more than 10% of shares in various banks — a critical threshold for regulators.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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