All Four Big Banks Report Strong Q3 Earnings, Stocks Advance
Friday the 13th was anything but unlucky for Wall Street’s biggest banks, with Wells Fargo (NYSE: WFC), Citi (NYSE: C), BlackRock (NYSE: BLK), and JPMorgan Chase (NYSE: JPM) posting better-than-expected Q3 financial results. The optimism spilled into the stock market, pushing benchmark indices, including Dow Jones and the S&P 500, higher at the opening bell.
Wall Street’s Biggest Banks Smash Expectations With Q3 Reports
On Friday, Wall Street’s largest banks unveiled their highly anticipated quarterly financial results, with each institution surpassing analysts’ expectations.
Wells Fargo, the multinational financial giant, posted robust earnings per share (EPS) of $1.48 (or $1.39 excluding discrete tax benefits), beating the consensus estimate. Moreover, their total revenue reached $20.9 billion, a solid 6.5% increase from the previous year’s third quarter and above the consensus projection of $20.1 billion.
Another banking behemoth, JPMorgan Chase, reported EPS at $4.33 and revenues of $40.69 billion, comfortably exceeding the LSEG revenue estimate of $39.63 billion. The bank’s profit skyrocketed by 35% despite a significant legal expense of $665 million.
BlackRock Inc., the largest asset manager in the world, disclosed a diluted EPS of $10.66 (or $10.91 adjusted) while posting revenue of $4.52 billion, slightly below consensus estimates. Its assets under management (AUM) surged by $1.1 trillion year-over-year, including $307 billion of net inflows.
Citigroup also joined the chorus of strong reports, with earnings per share of $1.63, beating expectations. Revenue reached $20.14 billion, also above the consensus estimates of $19.31 billion.
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US Stocks Advance on Positive Bank Reports, Treasury Yields Ease
Before their reports were unveiled, some analysts braced for a challenging quarter for big banks, anticipating wide losses due to rising interest rates, compressed lending margins, and lower loan demand. These concerns were fueled by expectations of increased losses on banks’ bond portfolios and mounting funding pressures stemming from higher deposit rates.
Due to these headwinds, Christopher McGratty and David Konrad, analysts at KBW, expected banks’ per-share earnings to decline by 18% in the quarter. However, as seen from the above results, major banks have defied most expectations thanks to diversified revenue streams and their ability to adapt to higher interest rates.
The optimism surrounding the reports was also reflected in the market reaction. In particular, Wall Street’s benchmark stock indexes opened higher on Friday, with the Dow Jones Industrial Average (DJIA) climbing 0.7% to 33,863 and the S&P 500 edging 0.4% higher to 4,368. Meanwhile, US Treasury yields saw a slight pullback after a major spike in recent sessions.
Do you think the banking sector will continue to prove its resilience in 2024? Let us know in the comments below.