The Q4 earnings season kicked into higher gear Wednesday as JPMorgan Chase, Goldman Sachs and BlackRock delivered major earnings beats. Wells Fargo reported mixed results. Citigroup topped views and announced a $20 billion stock buyback program.
Earnings growth for banks and financial stocks appears set to reaccelerate this year with an improving regulatory backdrop, Truist and BofA wrote in research notes last week. Meanwhile, Keefe Bruyette anticipates banks will receive a boost as the Basel III Endgame capital requirements "will be meaningfully watered down."
However, the Nasdaq and S&P 500 have pulled back below their 50-day moving averages. IBD currently recommends remaining cautious, with 20% to 40% stock market exposure.
JPMorgan Chase
JPMorgan Chase reported earnings of $4.81 per share, beating FactSet views for a 35% increase to $4.09 per share. Reported revenue increased to $42.77 billion per share, also clearing views for about 9% growth to $41.9 billion.
Average loans and deposits both rose 2% from last year. Investment banking fees jumped 49% year over year, while markets revenue increased 21%. Assets under management rose 18% to $4 trillion.
Net interest income eased 3% to $23.5 billion. The bank lowered its provision for credit losses by 5% to $2.63 billion.
JPMorgan's earnings growth has slowed over the past five quarters leading up to the report, from a 50% gain to a 4% decline for Q3.
Elsewhere, CEO Jamie Dimon during a CBS News Sunday Morning interview said he will "likely" take over as chairman once he steps down as head of the Wall Street bank, noting that the decision is ultimately up to the board.
Edward Jones after the report wrote that revenue was bolstered by strength in traditional lending income, as well as fees related to JPMorgan's investment banking and credit card businesses, according to a note shared with IBD.
Analyst James Shanahan noted that securities trading-related revenue came in lower than expected, which partially offset results. Management guided 2025 net interest income of $94 billion, which marks a modest improvement from 2024 and was above current consensus forecasts, Edward Jones wrote. The firm added that JPMorgan's focus on technology, digital solutions and payments is a key strategic advantage. The bank's willingness and ability to invest heavily in growth opportunities should also support continued global market share expansion.
JPMorgan rose about 2% Wednesday. The gain put JPM stock in a buy zone above a 245.69 buy point for a six week cup-with-handle base.
Shares hit a record high of 254.31 on Nov. 25.
Goldman Sachs
Goldman Sachs earnings leapt to $11.95 per share from $5.48 per share last year. Net revenue surged 23% to $13.87 billion.
FactSet analysts expected earnings of $8.21 per share on $12.36 billion in revenue.
Global Banking & Markets revenue jumped 33% while investment banking fees increased 24%. Equities revenue rose 32%. Asset & Wealth Management revenue climbed 8%.
Goldman Sachs lowered its provision for credit losses to $351 million for the quarter, down from $577 million last year.
Goldman Sachs stock bolted 6% higher Wednesday. That hoisted GS stock to within less than 1% below a flat base but point at 612.73.
Wells Fargo
Wells Fargo reported earnings of $1.43 per share, up from 86 cents last year. Earnings just edged out expectations for $1.42 per share.
Total revenue ticked down 0.5% to $20.38 billion, missing views for $20.58 billion.
Net interest income declined by 7% in Q4.
The bank cut its provision for credit losses to $1.095 billion from $1.28 billion.
"While the bar remains low, WFC is improving profitability and becoming a better-managed bank," Edward Jones analyst Kyle Sanders wrote in a research note after the report. Sanders believes the momentum will continue in 2025 with further cost-containment and strategic initiatives to bulk up its investment banking, trading and credit card products, which should drive diversified revenue growth. Wells Fargo is also making progress on addressing its past regulatory issues, including its asset cap restriction, Sanders said. Once the asset cap is lifted, Edward Jones sees a "significant opportunity" for greater profitability improvements via reduced compliance spending and improved loan growth.
Wells Fargo surged 6.7% Wednesday. The move put WFC stock above an aggressive early entry at 73.25. The stock is working on a seven-week flat base with a 78.13 buy point.
BlackRock
BlackRock posted earnings of $11.93 per share adjusted, up 23% from last year and easily clearing estimates for $11.26 per share. Revenue jumped 23% to $5.68 billion, also beating views for $5.57 billion.
BlackRock earnings growth declined the last two quarters leading up to the report.
Edward Jones said that strong asset inflows this quarter contributed to a record-setting year for BlackRock. BlackRock announced nearly $30 billion in acquisitions in 2024 to bolster its position in fast-growing, private markets. But the focus for 2025 will likely be on integrating those firms into BlackRock's culture and retaining talent, according to Edward Jones.
"BlackRock has a good track record with acquisitions, and if successfully executed, we see the firm's push into private markets driving higher fee rates, better revenue growth and higher profit margins over the long term," analyst Sanders wrote. Meanwhile, BlackRock is uniquely positioned to capitalize on industry growth trends, particularly ETFs.
Edward Jones expects "several trillions" of dollars will our into exchange traded funds over the next decade. BlackRock is the global leader in ETFs through its iShares franchise, and is set to expand its product lineup in alternative assets and sustainable investing, both of which are growing in popularity with investors.
"We believe BLK shares present an attractive opportunity for long-term investors," Sanders wrote in the research note.
BlackRock surged 5.2% Wednesday.
BLK stock is down from its Dec. 12 record high, working to regain support at its 50-day line and 21-day exponential moving average.
Citigroup
Citigroup earnings improved to $1.34 per share, from a loss of $1.16 per share last year. Total revenue increased 12% to $19.58 billion.
FactSet expected earnings of $1.22 per share on $19.51 billion in revenue.
Citi also announced that its board approved a $20 billion stock repurchase program.
Citi jumped 6.5% Wednesday.
C stock is extended from an early November breakout, and from a rebound off support at the stock's 10-week moving average.
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