JPMorgan Chase (JPM) and Goldman Sachs (GS) announced the forecasts for the first quarter on Wednesday, with Wells Fargo (WFC) also beats estimates. Bank shares were mixed
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Large bank shares are increasing again through Biden’s massive stimulus package and the continued explosion of vaccines. Treasury yields are also increasing, with the 10-year rate again above 1%. Investment banking activity also declined rapidly as SPACs exploded, while commercial banks benefited from an increase in volatility in the first quarter.
JPMorgan earnings
Estimates: Zacks Investment Research analysts expected the EPS to nearly triple to $ 3.05 in the same quarter last year, with revenue of $ 30.07 billion, up 6.4%.
Results: JPMorgan’s earnings increased 477% to $ 4.50 per share. Revenue rose to $ 33.12 billion. But earnings were boosted by JPMorgan, which released $ 5.2 billion from credit loss reserves.
Consumer bank revenue fell 10% to $ 6.7 billion. Revenue from investment banking services more than tripled to $ 2.9 billion. Fixed-income income grew by 15% to $ 5.8 billion, and equity income increased by 47% to $ 3.3 billion. Commercial banking rose 11% to $ 2.4 billion. Asset management revenue increased by 20% to $ 4.1 billion.
StockShares fell 0.4% to 153.54 on the stock market today. The JPMorgan stock is in a four-week tight pattern with a 161.79 entry, according to a MarketSmith analysis. This is a follow-up buying opportunity because it follows a proper buying point from a basic pattern. In this case, JPMorgan shares had a previous buying point of 141.20 from a cup base.
“With all the stimulus spending, potential infrastructure spending, continued quantitative easing, strong consumer and business balances and euphoria around the potential end of the pandemic, we believe the economy has the potential to have extremely robust, multi-year growth,” said Jamie Dimon, executive director. chief, said in a statement Wednesday.
Last week, he wrote in a letter to shareholders that large banks pose a major threat to fintech competitors as banks play a smaller role in the financial system.
He also said that the stock market valuations are ‘quite high’, thanks to excess savings that make it into equities. Dimon sees the U.S. economy booming in 2023, but adds that tougher times lie ahead.
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Goldman Sachs
Estimates: Analysts see that Goldman Sachs’ earnings more than doubled to $ 9.79 on sales of $ 11.5 billion, an increase of 31.5% year-on-year.
Results: EPS of $ 18.60 on revenue of $ 17.7 billion. Investment banking revenue increased 73% to $ 3.77 billion. Fixed income income rose 31% to $ 3.89 billion, and equity income rose 68% to $ 3.69 billion. Asset management revenue rose to $ 4.61 billion from a negative $ 96 million a year ago. Wealth management revenue grew 16% to $ 1.74 billion.
The provision for credit losses was a net benefit of $ 70 million, compared to the net provision of $ 937 million a year ago.
Stock: GS share rose 4.7% to 342.97 on Wednesday. The Goldman Sachs stock is in a three-week tight pattern with a buying point of 342.98. It also finds support at the 10-week line.
According to reports, Goldman Sachs plans to offer private wealth clients access to Bitcoin and other digital assets.
Wells Fargo
Estimates: Wells Fargo saw a profit of 69 cents a year ago compared to 1 cent. Sales are expected to drop 0.6% to $ 17.62 billion.
Results: EPS of $ 1.05 on revenue of $ 18.06 billion. Provision for credit losses decreased by $ 5.1 billion. Consumer bank revenue was $ 8.65 billion. Commercial bank revenue fell 12% to $ 2.2 billion. Revenue from corporate and investment banking services increased by 7% to $ 3.6 billion. Wealth management revenue rose 8% to $ 3.5 billion.
Stock: Wells Fargo share rose 4.7% to 41.67. WFC shares are in a four-week tight pattern with a buying point of 41.64.
Bank of America (BAC) and Citigroup (C) reported Thursday, while Morgan Stanley (MS) reported Friday.
The Fed is not expected to raise rates
As lending rates remain low and the economy rebounds, inflation fears have also increased, causing bond prices to rise and yields to rise. Higher bond yields favor banks because they borrow at the long end of the yield and borrow at the short end.
Meanwhile, Federal Reserve Chairman Jerome Powell said it was highly unlikely the Fed would raise rates this year. In a 60-minute interview Sunday, he said inflation would have to be around 2% before the rate could be raised.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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