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Bank Earnings: JPMorgan, BofA, and Citi Kicked the Season Off
Live coverage of big bank's financial results
Last Updated:
Jan. 12, 2024 at 4:45 PM EST
What Happened
Bank earnings disappointed, but one-time charges at JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America obscured how the banks really performed during the fourth quarter.
JPMorgan Chase reported fourth-quarter earnings per share of $3.04 and revenue of $38.6 billion, missing consensus estimates.
Bank of America's results also fell short of analysts' expectations, sending the shares lower in premarket trading. Wells Fargo, meanwhile, saw a jump in credit loss provisions.
Citigroup reported a net loss due to a litany of one-time charges.
BlackRock, the world's largest asset manager, beat fourth-quarter earnings expectations and announced the acquisition of Global Infrastructure Partners in a push into private markets.
Key Events
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6 months ago
Shares of bank stocks fell today after the first wave of earnings landed.
The KBW Nasdaq Bank Index fell 1.1%. JPMorgan Chase and Bank of America, whose results both missed Wall Street consensus estimates, closed down 0.7% and 1.1%, respectively.
Citigroup's earnings also missed estimates, but shares climbed 1% on the day.
Wells Fargo shares fell the most among the group, ending the day down 3.3%. The bank reported a higher provision for credit losses in the quarter and warned that net interest income would come in lower in the new year.
Shares of BlackRock, the world's largest asset manager, gained 0.9% after posting an earnings beat.
6 months ago
After Citigroup reported a quarterly loss of $1.8 billion on Friday, CEO Jane Fraser wasted little time on niceties during the company’s earning call. Neither did Wells Fargo analyst Mike Mayo.
“I count 12 restructurings at Citigroup and I count 12 failed restructurings,” said Mayo, the first analyst to pose questions to Fraser on Friday. So, he asked, why is this time different?
Mayo is bullish on Citi shares, rating them Overweight, and his question is likely top of mind for many investors who have been watching Fraser pursue an ambitious turnaround effort at one of the nation’s biggest banks. Under Fraser, who took over as CEO in 2021, Citi has refocused itself around five business lines, cut layers of management, and moved to jettison some international businesses. It also provided fresh light Friday on plans to cut 20,000 employees to rein in expenses. These efforts are making the bank a more nimble and focused organization, Fraser said.
“It is not lost on me that there have been attempts to change this firm,” she said. “But I and the management team are fully committed and you have proof points where we have made very tough decisions and pushed through a lot of changes to get us to the simple Citi we are today.”
Investors gave Fraser the benefit of the doubt on Friday. Citi’s stock, which has been a laggard among big bank stocks, was up 2% in mid-day trading.
Fraser acknowledged the quarterly results were “clearly very disappointing,” but emphasized that these are one-off events. “While these items are very painful, they are idiosyncratic in nature and do not knock us off course,” she said.
Friday’s fourth-quarter earnings report was marred by one-time charges, including a $780 million charge due to severance and other restructuring costs, a $1.7 billion FDIC special assessment, and a reserve build of $1.3 billion associated with "transfer risk" in Russia and Argentina.
The bank said it expects full-year 2024 expenses of approximately $53.5 billion to $53.8 billion. That compares to $56.4 billion for 2023.
Despite the "messy" fourth-quarter report, adjusted EPS of $0.84 was incrementally ahead of consensus $0.81, analysts at Seaport Research Partners said Friday. They see a path ahead for lower expenses in 2025 and 2026. “Regardless, the Citigroup story is all about the outlook, and that was a bit better than expected,” the analysts wrote in a research note.
Updated 6 months ago
(Michael Nagle/Bloomberg)
Bank of America CEO Brian Moynihan has penciled in a soft landing for the economy and offered some insights into the state of the consumer on the company’s fourth-quarter earnings call.
“We see the consumer activity indicating that they're still in the game,” Moynihan said on the call Friday. “They're still spending money, where they spend it is a little different—more in services and going out and restaurants and experiences and less on goods at retail.”
“So they're working, they're getting paid to have balance in their accounts,” he added. “They have access to credit. They've locked in good rates on their mortgages, and they’re employed.”
“We think the soft landing is a core thesis,” he said.
The bank’s outlook largely stayed the same from the previous quarter despite anticipation of more rate cuts from the Federal Reserve. In December, FOMC members projected three quarter-point cuts in 2024, up from two earlier in the year.
Management expects the bank’s net interest income–the profit earned on loans and other products that charge interest–to tip lower during the first half of 2024 and grow in the second half due to several factors, including deposit growth and lower-yielding securities coming off the balance sheet and being reinvested.
Earlier Friday, BofA turned in quarterly earnings of 35 cents a share, missing Wall Street’s call for 53 cents. Removing two sizable charges, adjusted earnings of 70 cents arrived in line with estimates.