US earnings preview: banks likely to be key

[MongiIG]

The US earnings season kicks off today with the big US banks, JPMorgan Chase, Citigroup, and Wells Fargo all on first quarter numbers.

 Jeremy Naylor | Analyst, London | Publication date: Friday 14 April 2023 

IGTV’s Jeremy Naylor looks at where to find the answers on how the big banks have fared and to what degree the recent crisis has hit their balance sheets.

 

US earnings

Take a look at some of the stocks worth watching today in the US markets. It's a big day for US banks. We've got JPMorgan Chase out, the largest US bank by assets, it's scheduled to release its first quarter (Q1) earnings before the US market opens today.

Market expects the bank to post earnings of $3.41 per share, an increase around about 24% on the same quarter this time last year. Revenue is forecast to rise 14% to $36.13 billion. Now these are analyst expectations and they are fairly robust given the backdrop. But rising interest rates have really been a boon for some of these banking stocks.

You can see we will open all-sessions on the IG platform ahead of these numbers at $128.94. But, as ever, forecasting for the month to come will be key as the economy is expected to slow later this year. Investors will be particularly focused on the amount banks will set aside to cover potential loan losses.

JPMorgan

In the case of JPMorgan, analysts are anticipating a provision for credit losses in the region of two and a quarter billion dollars. Flow of deposits will also be closely watched with the collapse of Silicon Valley Bank and Signature Bank.

And you can see here this drop that we've seen recently in the shares of JPMorgan and reflected across the banking sector have really been all about concerns about the outlook for banks, which is why this monthly or quarterly report is going to be so critical.

We saw deposits leaving smaller regional banks for larger banks such as JP Morgan. But since the same banks agreed to rescue, First Republic Bank concerns appeared on whether the crisis hit regional banks has spread to the broader banking system.

Citigroup

These sort of questions will be answered by the release of numbers out today from JPMorgan and also Citigroup. Expectations there are earnings per share of $1.70 on revenues at just over $20 billion.

I want to show you the Citigroup share price as well. Like JPMorgan Chase this is trading all-sessions on the IG platform and it's trading right in the middle of this band between the 4050 and the 5455 level. We're opening all-sessions at nine o'clock this morning UK time at 4751.

Wells Fargo

Watch out for this bank as well when it reports earnings before the bell today and more domestically orientated is Wells Fargo, forecast for its earnings today at a $1.12 per share on revenues at $20.12 billion.

And because of this, this sort of twist towards the consumer in the US, it'll be more interesting to see just how the consumer is faring as opposed to the international banks which rely more on the capital markets like Citigroup and JP Morgan Chase.

Wells Fargo will open today all-sessions on the IG platform at 3935.

[MongiIG]

US earnings: banks kick things off in fine style

JPMorgan Chase, Citigroup, and Wells Fargo have set a high bar for the first quarter earnings season in the US with better than expected earnings

 Jeremy Naylor | Analyst, London | Publication date: Friday 14 April 2023 

 

Q1 earnings start with a bang

It's been a great start to the first quarter (Q1) earnings season in the US with three of the biggest banks reporting some numbers that beat analysts expectations.

We saw numbers from JPMorgan Chase, Citigroup, and Wells Fargo, three very different banks in terms of their overall out.

JPMorgan

Let's look, first of all, at the reaction in the market to what's been happening at JPMorgan.

You can see quite clearly here the reaction to the market with that stock currently up 5.8%. This is ahead of the US trading day today. These are all-session stocks on the IG platform. So we've got a situation where it's benefited from this reported surge in profit in the first quarter and an increase in deposits as the Wall Street giant continues to weather the turmoil in the banking sector.

It's delivering these record results today with profits soaring 52% to hit $12.6 billion while its diluted earnings per share was $4.10, significantly ahead of the $3.70 expected by some analysts. So that was a better than expected number coming through from JP Morgan Chase.

Citigroup

Then came the turn of Citigroup. Now, Citigroup had already risen some 3% in the market ahead of its earnings after the numbers coming through from JPMorgan Chase.

But in fact, what happened was that we have subsequently seen a little bit of a sell-off in that gain that we've got. Still, Citigroup is expected to rise at the start of today's trade. The company came through with a $4.6 billion in earnings, far ahead of expectations. But the big gains we saw earlier on in the session have now evaporated a little bit. But the message is here that it's broadly speaking, pretty good numbers.

Wells Fargo

Look at this. This is all-sessions on the IG platform for Wells Fargo. Now this is one of the biggest domestically orientated banks.

I was talking there at the top about three very different banks, Citigroup and JP Morgan Chase have a lot in common. But Wells Fargo is very different because it represents the consumer and it's the consumer here that's being analysed. And quite frankly, the numbers have come through with an impressive number earning $5 billion.

Wells Fargo beat expectations in the process with that stock at 4.98% ahead of the open of the US trading day today, which are likely to be led higher by these banks.