As is always the way when it comes to earnings season, the big banks got things started as JPMorgan Chase and Citigroup unveiled their third-quarter financials.
Oct. 14, 2020
Sometimes it’s nice to have a little bit of ‘precedented’ in these unprecedented times, and there are few things more anticipated than the big banks getting earnings season underway. This is typically followed by Netflix the following week, before what we unaffectionately refer to as “the week of hell” kicks off — when all the major tech companies, plus about 50 other stocks in our shortlist, release their numbers.
If you wish to learn the Art Of The Earnings Call, our head analyst Rory gave a MyWallSt subscriber exclusive Insight into surviving this silly season here. Not a subscriber? No problem, simply try out our app with a free access.
JPMorgan Chase Q3 earnings
Before even getting into their own financials, JPMorgan Chasen (NYSE: JPM) was optimistic about trends in the U.S. economy, adding that a well-crafted stimulus package would help the recovery. Overall, JPMorgan beat analyst estimates in Q3:
- Net Income: $9.443 billion compared with $9.080 billion, or $2.68 a share, in the year-earlier period.
- EPS: $2.92 a share, compared with $2.68 a share a year earlier.
- Revenue: $29.9 billion, down from $30.01 billion a year earlier.
- Credit reserves: $34 billion (Banks must hold a minimum cash reserve, which is a specified minimum fraction of the total deposits of customers, which commercial banks hold as reserves either in cash or as deposits with the central bank).
Other key takeaways:
- Global investment banking fees rose 9% to $2.2 billion amid record volumes of capital raising during the pandemic.
- Total markets revenue rose 30% to $6.6 billion as fixed income markets revenue rose 29% and equity markets revenue rose 32%.
- Net interest income fell 9% to $13.1 billion, while non– interest revenue rose 7% to $16.8 billion.
- The bank set aside $611 million in provisions for loan losses, down $903 million from the year-earlier period.
Citigroup Q3 earnings
Citigroup (NYSE: C) also managed to beat expectations on Tuesday. However, there was a mixed reaction from analysts as the bank’s trading division once again offset a slump in profits driven by near-zero interest rates and reserve build-ups. Here’s how Citigroup did in Q3:
- Net Income: $3.2 billion, versus the $1.8 billion estimate
- EPS: $1.40 per share, versus the $0.92 estimated.
- Revenue: $17.3 billion, versus the $17.2 billion estimate.
- Credit reserves: $26.4 billion
Other key takeaways:
- Global Consumer Banking revenues fell 13% to $7.2 billion as client spending remained stifled.
- Net credit losses climbed roughly 200% from the year-ago period to $329 million.
- Revenue fell 7% from the year-ago period
Who’s up next?
The following banks will unveil their Q3 earnings reports later today:
- Bank of America
- Wells Fargo
- Goldman Sachs
- U.S. Bancorp
- PNC Bank
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.