JPMorgan and Citigroup Soar on Earnings Beat, Wells Fargo Falls

Alan Penny

14 January 2020

3 min read

  • JPMorgan and Citigroup posted earnings beat premarket
  • Wells Fargo got hammered for missing estimates
  • US banking sector is looking strong overall

Early during the Tuesday trading day, J.P. Morgan Chase and Citigroup reported Q4 earnings to Wall Street. Before the open, there was a lot of momentum flowing into the marketplace. This was because the earnings reports have been extraordinarily anticipated, and they have quite a bit of sway when it comes to the directionality of markets in general.

JPMorgan Chase breaks expectations

JPMorgan Chase reported early during the day, before the opening bell. Earnings came in at $2.57 a share, while revenue rose 9% to one $1 billion. Consumer and community banking both rose 3% to $14.04 billion. This was led by card, auto revenue, and merchant services rising 9% as well, but it is worth noting that home lending revenue fell 5%. Commercial banking revenue dropped 3% down to $2.23 billion.

JPMorgan clearly broke all of those expectations rather drastically, offering reasons for traders to celebrate

JPM reported that fixed-income trading revenue gained 86% to $3.4 billion, while equity trading revenue rose 15% to $1.5 billion. The investment banking sector revenue rose 6% to a total of $1.8 billion, while the revenue from asset and wealth management climbed 8% to come in at $3.7 billion.

This was against the backdrop of an expected earnings-per-share to come in at just $2.32. Revenue was seen rising 4% to come in at $27.261 billion.

JPMorgan clearly broke all of those expectations rather drastically, offering reasons for traders to celebrate. The initial reaction was for shares to gain 1.4% in premarket trading, as money flew back into shares in a market that was already rather bullish.

Wells Fargo profit weaker than expected

Wells Fargo reported premarket as well, as Wall Street estimated that the report was going to see earnings-per-share fall 7% down to $1.12. Revenue had also been seen slipping 6% to $19.809 billion.

Part of this would be due to the fact that the mortgage-lending giant is still trying to repair its reputation after a massive lending scandal from the prior decade.

The bank reported weaker-than-expected profit and revenue for the fourth quarter, saying it had a net income of $2.87 billion, or $0.60 a share. The previous earnings report was $6.06 billion, or $1.21 per share. The number also included $1.5 billion or $0.33 per share litigation costs. Wall Street punished the start, chopping almost 4% off its value premarket.

Citigroup posts similar results to JPMorgan

Citigroup also reported before the bell with an earnings-per-share number of $2.15, while revenue was at $18.38 billion. A significant amount of the gains came from Asia, although the US division is starting to pick up steam as well.

Shares climbed 0.8% before the bell, as the banking giant has reworked its US retail business and investment banking business to improve growth. The expected earnings were for an increase of 13% to $1.82 per share. Revenue had risen by 3% to reach towards $17.705 billion, showing that Citigroup had similar results to its competitor JPMorgan.

Banking sector looks relatively strong

The banking sector looks to be relatively strong in the United States, and with both Goldman Sachs and Morgan Stanley reporting tomorrow, the market will get a better look at its overall health.

Wells Fargo is a bit of an outlier, as it has been in full “damage control” mode since the lending scandal broke over the last couple of years.

Written By
Alan Penny

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