Bank Stocks: JPMorgan Earnings Top Views; Citigroup Wells Fargo On Tap

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JPMorgan Chase (JPM) Y fargo wells (Wfc) reported better-than-expected fourth-quarter earnings early Friday, with Citigroup (C.) on tap ahead of the open, amid the Federal Reserve’s plan to raise interest rates in the coming months and omicron’s impact on the economy. Shares of JPM and Citigroup fell in premarket trading, while Wells Fargo rose.




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The reports come as expectations of changes in Federal Reserve policy send bond yields and interest rates higher. Higher interest rates benefit banks, who make more money on the loans they make. CFRA Research analyst Kenneth Leon says in a recent note to clients that consumer loan activity is improving but still below pre-pandemic levels. In March 2020, consumer bank loans peaked at $ 859 billion and then fell to a low of $ 743 billion in April 2021. December 2021 consumer bank loan balances are just below of the $ 800 billion.

Omicron Impact

Meanwhile, big banks will also be hit by a slowdown in consumer spending as inflation soared in the fourth quarter and omicron swept the country.

“The short term brings uncertainty and some weakness on the path of consumer spending, due to the slow seasonal period and the possible omicron effects,” León said. “We believe this may be transitory if the omicron variant can be controlled, especially as we approach the spring season of 2022.”


CPI inflation rate hits new 39-year high, but Dow Jones rises


Investment activity remains dynamic. Equity markets activity increased 19% year-over-year to $ 1.3 trillion in 2021, marking the strongest period since records began in 1980, Leon wrote.

“Stock trading volumes and transaction fees have increased significantly with increased investor participation, capital inflows and active retail investor trading,” Leon wrote. “We believe investment banks could see 8-10% more year-over-year growth in debt underwriting fees for new issues, driven by high-yield corporate bond issues.”

Elsewhere, big banks will have fewer cash reserves to release this quarter. They had built up huge cash reserves at the start of the pandemic, anticipating loan defaults as people lost their jobs. However, many of those reserves were not necessary and were released in the bottom line during the last few quarters. As a result, there are fewer of those funds to bring in this quarter to increase earnings.

JPMorgan earnings

Dear: FactSet analysts saw JPMorgan earnings of $ 3 a share, a 21% drop from the same period last year. Revenue was seen to hit $ 29.78 billion, a 1.3% decrease from last year.

Results: JPMorgan’s earnings per share fell to $ 3.33 a share, while revenue increased to $ 30.35 billion.

JPMorgan’s earnings got a boost as it released $ 1.3 billion from loan loss reserves. Loans rebounded, especially in its wealth management division.

Bank stocks: JPM stocks

The shares fell 3.2% to 162.90 in the early hours of Friday. stock trading. JPM Actions have a flat base point of purchase of 173.06, based on MarketSmith Graphical Analysis.

Stocks have gained in recent days, having risen above their 50 day line January 4. JPM shares relative force line has an uptrend. His RS classification it is a 77 of the best 99 possible. His BPA classification is 79

Wells Fargo earnings

Dear: Analysts were expecting Wells Fargo earnings of $ 1.04 per share, a 63% increase over the same period last year. Views are for revenue of $ 18.79 billion, an increase of 4.8%.

Results: GAAP earnings came to $ 1.38 per share, while revenue increased to $ 20.86 billion.

Wells Fargo Stock

The shares rose 2.7% to 57.50 early Friday. WFC Actions it extends after a breakout in early January above a flat-based buy point of 52.66. WFC shares have an RS rating of 95 and an EPS rating of 68. Their relative strength line is trending higher, reaching highs not seen since last April.

Citigroup earnings

Dear: Analysts see Citigroup earnings per share of $ 1.72, 16.8% below the prior-year quarter. Revenues are expected to increase 2.1% to $ 16.85 billion.

Results: Check back on Friday.

Citigroup agreed early Friday to sell banking operations in four Southeast Asian countries for $ 2.7 billion. Its operations in Indonesia, Malaysia, Thailand and Vietnam are being acquired by Singapore-based United Overseas Bank.

Citigroup shares

The shares fell 1.7% to 66.60 in pre-market trading. Citigroup shares are climbing toward a false bottom purchase point of 74.74. The stock rallied above its 50-day line after bottoming out in December.

Citigroup’s relative strength line is moving up again after falling for several weeks. Its RS rating is still just 39, while its EPS rating is a solid 89.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.

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