Major banks and financial institutions kicked off quarterly earnings early Friday, with shares of Bank of New York Mellon swinging sharply higher after reporting a strong Q4 performance. JPMorgan and Citigroup pared early gains, and Wells Fargo and Bank of America traded lower after early reports. BlackRock reported a strong fourth-quarter earnings beat, amid its $3 billion takeover of fund manager Global Infrastructure.
Lower interest rates and credit quality, as well as regulation and the political backdrop are all key themes for U.S. banks in 2024, Deutsche Bank analyst Matt O'Connor wrote in a Tuesday research note. After the pandemic, banks have battled high interest rates that made it more expensive to hold deposits. The anticipated lower interest rates this year will be good for bank capital, but are generally bad for earnings, O'Connor wrote.
O'Connor upgraded JPM stock to buy from hold Tuesday and lifted its price target to $190 from $140. The note cited good leverage for capital markets revenues, strong loss-reserve levels and upside to the bank's net-interest income guidance. However, O'Connor expects weak net-interest income guidance from Wells Fargo based on likely lower rates and slow loan growth. The analyst downgraded WFC stock to hold from buy but maintained a $51 price target.
JPM Stock
JPMorgan Chase reported Q4 results first thing Friday morning. Adjusted EPS came in at $3.97 for the quarter. That topped expectations of analysts polled by FactSet for a 5.3% earnings decline to $3.38.
Revenue was reported at $38.6 billion, vs. expectations for $39.73 billion, with managed revenue of $399 billion.
The period marked a fifth quarter of double-digit earnings gains for the bank.
JPM stock ended Thursday extended above a buy zone after a mid-December breakout from a cup base. Shares rallied more than 28% from late October lows, overtaking prior highs from late 2021 before pulling back to test short-term support.
Shares trimmed early gains to 1.1% Friday, trading high among the Dow Jones industrials in morning trade.
JPMorgan shares boast a 2.5% dividend yield.
Wells Fargo
Wells Fargo's reported earnings came in at 86 cents a share, just shy of FactSet's forecast for a 29.9% increase to 87 cents per share. Adjusted earnings of $1.16 per share topped forecasts of $1.12 per share. Revenue eked out a gain, up to $20.48 billion, above views for $20.33 billion.
Still, the results mark six consecutive earnings gains, with revenue up for a fourth straight quarter.
WFC stock ended Thursday near the top of a buy zone for a cup-with-handle base following a mid-December breakout. Shares dipped 1.7% Friday.
Wells Fargo has a 2.9% yield.
Bank of America
Bank of America reported diluted net income of 35 cents per share, down from 85 cents a year ago. Adjusted diluted earnings were 70 cents. FactSet used the 35 cent number, to compare to expectations of 55 cents.
Revenue was $22 billion, or $23.5 billion on an adjusted basis. Forecasts called for $23.76 billion. The result marked two consecutive quarters of declining earnings and revenue.
BAC stock had broken briefly above 34.07 buy point in a three-weeks tight pattern. Shares Thursday ended back below the buy point. The stock slipped 1.4% early Friday.
BAC stock offers a 2.8% dividend yield.
BK
Shares of Bank of New York Mellon rumbled 4% higher Friday after the company reported diluted EPS down 47% to 33 cents, vs. FactSet consensus for a 37% rise to 85 cents per share. Adjusted earnings came in at $1.28 per share, beating forecasts of $1.13 per share. Revenue rose to $4.31 billion, narrowly above expectations.
The earnings drop snuffed a six-quarter growth streak.
BK stock has rallied 33% off an October low, ending Thursday in a buy zone for a saucer-with-handle base.
BK offers a dividend yield of 3.2%.
BlackRock
Asset management giant BlackRock weighed in with diluted EPS of $9.66, a 17% increase and above the FactSet target for a 1.8% decline to $8.77.
Revenue for the quarter was $4.631 billion, better than views for a 6.3% gain to $4.61 billion.
BLK stock rallied 37.4% from the end of October and broke out in mid-December. Shares ended Thursday at 793.61, in a buy zone for a 31-week base. The buy zone extends to 820.85.
BLK stock traded effectively flat Friday.
BlackRock shares offer a 2.5% yield.
Citi
Citigroup shares pared early gains to 0.4% after reporting EPS of 84 cents, above views for 79 cents. Revenue was $17.4 billion, vs. Citi views for a 4% gain to $18.73 billion.
The company preannounced on Thursday it would take an $880 million hit tied to devaluation of Argentina's peso. It would write down another $780 due to restructuring. Management reported Friday the company planned to cut 20,000 employees, about 10% of its workforce, by the end of 2026.
Citi revenue growth had slowed over the prior two quarters, but had still ranged from impressive 59% to 75% gains. Earnings, however, have been a disappointment with just one quarterly gain in the last four periods.
C stock this month briefly punched above a 53.23 buy point for a 48-week base. Citi spiked 40% from late October to its highest level since August 2022.
Shares have a 4.1% yield.
KBWB
The Invesco KBW Bank ETF, which invests in U.S. banks and financial stocks, moved 0.6% lower in Friday morning trade.
The ETF shows a three-weeks tight pattern, and is trading just below that pattern's 50.04 buy point.
The top five holdings of the KBWB ETF include Morgan Stanley at 8.33% and Goldman Sachs at 8%, followed by Bank of America at 7.82% and Wells Fargo at 7.81%. JPM stock is the fifth-largest holding, making up 7.72% of the fund.
KBWB offers a 3.2% yield.
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