Big Bank Earnings Reports Come in Mixed, Their Stocks Retreat

A Wall Street street sign is seen near the New York Stock Exchange, in New York, on Sept. 14, 2021. (AP/Mark Lennihan, File)

Several major U.S. banks reported mixed results in their quarterly earnings reports on July 12, with investors focusing on the misses, leading bank stocks to tumble.

The second-quarter reporting season kicked off in earnest on Friday as financial giants JP Morgan Chase, Wells Fargo, and Citigroup all releasing their quarterly earnings reports, providing a snapshot of the health of the U.S. banking industry.

Other banking giants Goldman Sachs, Bank of America, and Morgan Stanley are set to report their earnings next week.

JP Morgan’s net income surged 25 percent from a year ago, to $18.15 billion, topping analysts’ expectations and notching the highest quarterly profit in the history of U.S. banking. Revenue rose 20 percent, to $50.2 billion, beating by far the 2.2 percent increase that analysts expected.

However, several other JP Morgan metrics disappointed. Net income interest rose 4 percent, to $22.7 billion for the quarter, below the 6.5 percent analysts expected. The bank’s guidance for its 2024 interest income came in at $91 billion, which was slightly below market forecasts. JP Morgan also took $3.05 billion in provisions for credit losses, the highest level since the onset of the pandemic.

Shares of JP Morgan, which rallied over 20 percent so far this year, fell as low as 3 percent after the release of the report, and were down around 0.8 percent at around 2 p.m. EST.

Wells Fargo’s second-quarter report showed that net income came in at $4.9 million, a drop of around 1 percent from a year ago. Revenue ticked up slightly to $20.69 billion in the quarter, while FactSet expected a decline of 1.2 percent.

Net interest income, a key measure of profit from lending, came in at $11.92 billion, a 9 percent decline from a year ago and below market expectations for $12.12 billion.

Shares of Well Fargo, which were up around 22 percent so far this year, were down around 6.7 percent at the time of reporting.

Citigroup’s second-quarter results generally topped expectations for revenue and profit, though its stock slumped slightly with the bank’s expectations for a modest decline in net interest income in focus, as well as expectations for expenses to come in on the high end of its forecast.

The bank’s revenue rose 4 percent, to $20.1 billion, a better result than the $20.14 billion analysts expected. Citigroup’s net income rose 10 percent from a year ago, to $3.22 billion, topping expectations of $2.7 billion.

Citigroup said in its guidance that it expects its full-year expenses to come in at the high of a previously forecast range of $53.5–53.8 billion.

The bank’s net interest income fell 1 percent, to $13.49 billion from $13.9 billion a year ago, mostly driven by lower revenue from a net investment in Argentina.

Citigroup said it expects a modest decline in its full-year net interest income, excluding markets.

Shares of Citigroup were down 1.4 percent at the time of reporting.