US banks were surprised by the first quarter results positively. The market consensus was broken by JP Morgan Chase, Wells Fargo and Goldman Sachs. This is a strong opening to the results season on Wall Street.
JP Morgan Chase – America’s largest bank by revenue – had a net profit of $ 14.3 billion in the first three months of 2021. But more than a third of that gain came from releasing credit reserves last year – adding that one-off effect of 5.2 billion. Dollars to net income.
“It is now clear that the bank has accumulated excess reserves, and now these funds are fueling the flow of profits and mitigating weaknesses in retail banking,” CNBC quoted Octavio Marines, president of the consulting firm Optimas, as saying.
Earnings per share (EPS) reported by JP Morgan was $ 4.50Reserves liberation contributed $ 1.28. Without this effect, the EPS would have been $ 3.22 and would be just above the market expectations of $ 3.10. Due to very good commission results for trading in financial instruments, the largest US bank had revenues of $ 33.1 billion and exceeded analyst expectations of $ 30.5 billion. JP Morgan Chase shares were discounted on Wednesday by about 2%.
The market reaction was much better to the Wells Fargo quarterly report, which increased its price by more than 5%. This bank It posted $ 1.05 a share, which is 50% more than the 70 cents the market had expected. The revenue, raised by the bank at $ 18.06 billion, was also higher than most analysts’ expectations.
The market consensus broke the results obtained by Goldman Sachs. Earnings per share was $ 12.08, versus $ 7.47 exp. Revenue was also positive, at $ 11.7 billion, while analysts forecast “only” $ 9.9 billion. Goldman shares rose more than 2%. As in the case of JP Morgan, GS has also delivered good results thanks to very high client activity in stock and bond trading.
It just so happens that the largest banks are now opening their results season on Wall Street. On Thursday, first-quarter reports will be published by Bank of America, Citigroup and US Bancorp. Analysts hope that banks will be one of the main drivers of the resulting expansion of US companies. The banking sector was expected to post profits 156% higher than last year when it posted disastrous results in the face of anti-COVID shutdowns due to billions of dollars in provisions for anticipated credit losses. As can be seen from the example of JP Morgan’s results, the latter was not met.
Wall Street analysts and investors expect the current earnings season to be the best in more than a decade. The market consensus assumes this Corporate earnings attributed to the S & P500 rose nearly 25% year-over-year. Taking into account the fact that these forecasts are usually underestimated, results from the previous three months could be around 30% higher than they were a year ago. This means the fastest growth since 2010.