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US Q4 Earnings Begin – January 12th Financials Focus

Intermediate

Friday signalled a pivotal juncture with the kick off of the US Earnings Season, as notable companies disclosed their performance metrics. Investors, analysts, and market enthusiasts carefully analysed the data to inform their trading decisions and try to trade the news. This examination zeroes in on the releases from financial corporations that initiated the Q4 earnings season. 

JPMorgan’s Q4 Earnings: Profit Decline and Resilience

JPMorgan Chase reported a 15% decline in fourth-quarter profit, reaching $9.31 billion, or $3.04 per share, lower than $3.32 expectations. This was primarily due to a $2.9 billion fee related to government seizures of failed regional banks. Excluding this fee and $743 million in investment losses, earnings would have been $3.97 per share. Despite this, JPMorgan’s revenue increased by 12% to $39.94 billion, surpassing analysts’ expectations of $39.78 billion.

CEO Jamie Dimon highlighted the bank’s record full-year results, driven by better-than-expected net interest income and credit quality. The bank generated nearly $50 billion in profit in 2023, with $4.1 billion coming from the acquisition of First Republic during the regional banking chaos. JPMorgan’s resilience echoes its historical trend, emerging larger and more profitable after disruptions, such as seen during the 2008 financial crisis. As a result, shares of JPMorgan rose by 1.9% during premarket trading.

Bank of America Q4 Earnings: Decline Amid Charges and Rate Challenges

Bank of America

Bank of America witnessed a decline in its fourth-quarter earnings, leading to a drop in its shares, attributed to hefty one-time charges. The bank reported a net income of $3.1 billion, or 35 cents per share, down over 50% from the previous year. This decline was influenced by a pretax charge of $1.6 billion related to the transition away from the London Interbank Offered Rate (LIBOR) and a special $2.1 billion fee tied to the failures of Silicon Valley Bank and Signature Bank.

While adjusted earnings per share stood at 70 cents, surpassing analysts’ expectations of 68 cents, revenue fell short at $22.1 billion, a 10% decrease from the previous year. The bank attributed the decline in net interest income to higher deposit costs and lower deposit balances, offsetting higher asset yields. Despite expectations of benefiting from higher interest rates, Bank of America underperformed due to investments in low-yielding, long-dated securities during the COVID-19 pandemic, causing a loss in value as interest rates rose. Bank of America stock experienced a more than 1% decline this year after a modest 1.7% gain in 2023, in contrast to the S&P 500 financial sector’s 10% gain last year.

Wells Fargo Q4 Earnings Exceed Estimates

Wells Fargo & Co. reported a strong fourth-quarter net income of $3.45 billion, translating to earnings of 86 cents per share. Adjusted for one-time gains and costs, the earnings reached $1.29 per share, surpassing Wall Street expectations.  The largest U.S. mortgage lender also posted robust revenue figures, recording $30.55 billion in the period. Net revenue, accounting for interest expenses, was $20.48 billion, exceeding forecasts. 

For the entire year, Wells Fargo reported a substantial profit of $19.14 billion, equivalent to $4.83 per share, with total revenue reported as $82.6 billion. The bank’s performance exceeded market estimates, contributing to its strong position in the financial landscape.

BlackRock Exceeds Q4 Earnings Expectations

BlackRock reported fourth-quarter earnings of $1.38 billion, or $9.15 per share, beating Wall Street estimates. Adjusted earnings, at $9.66 per share, exceeded expectations of $8.84 per share. The investment firm’s revenue for the period met forecasts at $4.63 billion. For the entire year, BlackRock reported a profit of $5.5 billion, with revenue at $17.86 billion. Despite a slight 2% decline in shares since the year’s start, BlackRock has demonstrated resilience, climbing almost 5% in the last 12 months, outperforming the S&P 500.

Citigroup Reports Q4 Loss Amid Overhaul Initiatives

Citigroup

Citigroup posted a $1.8 billion fourth-quarter loss, impacted by significant charges tied to overseas risks, last year’s regional banking crisis, and CEO Jane Fraser’s corporate overhaul. The charges, totaling $4.66 billion or $2 per share, affected earnings, resulting in an adjusted figure of 84 cents per share—marginally beating the expected 81 cents. 

Fraser expressed disappointment but emphasised substantial progress in simplifying the bank through a planned 20,000 headcount reduction and expected $1 billion in severance costs over the medium term. Citigroup’s Q4 revenue slipped 3% to $17.44 billion but rose by 2% after excluding divestitures and charges, with positive performances noted in institutional services operations, U.S. personal banking, and investment banking.

Bank of NY Mellon Q4 Earnings Exceed Expectations

The Bank of New York Mellon Corporation (BK) reported Q4 earnings of $1.28 per share, surpassing the Zacks Consensus Estimate of $1.12. Despite a slight year-on-year decrease, the figures, adjusted for non-recurring items, marked a 14.29% surprise and continued a trend of beating estimates over the last four quarters. Revenues for the quarter reached $4.31 billion, slightly exceeding expectations and outpacing the previous year’s figure. The stock has demonstrated resilience, gaining 1.3% since the year’s start, outperforming the S&P 500. Future stock movements will hinge on management’s commentary during the earnings call.

Editor

Luke is currently a student in his final year studying A levels in Economics, Maths and Physics at The Bishop’s Stortford High School. He has a strong interest in economics and financial markets,... Continued

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