Q2 2023 Bank Earnings

Investments
, ,
1

Overview of bank earnings in Q2 2023.

2

I=8

On July 14, 2023, JP Morgan Chase, Wells Fargo and Citi Group reported their Q2 2023 earnings. Here is a summary of their results;

JP Morgan Chase

  • Revenue was $42.4 billion vs. $38.96 billion estimate.

  • EPS was 4.37 vs. $4 estimate.

  • Net interest income was $14.5 billion(+67% Y/Y), excluding First Republic bank it was up 40% Y/Y.

  • Average deposits declined 6% y/y but was up 3% Q/Q.

  • Debit and credit card sales volume grew 7% y/y.

  • Provision for credit losses was $2.899 billion(+27.4% Q/Q and +163% Y/Y) versus $2.72 billion estimate.

    “The U.S. economy continues to be resilient. Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. Labor markets have softened somewhat, but job growth remains strong. That being said, there are still salient risks in the immediate view—many of which I have written about over the past year. Consumers are slowly using up their cash buffers, core inflation has been stubbornly high (increasing the risk that interest rates go higher, and stay higher for longer), quantitative tightening of this scale has never occurred, fiscal deficits are large, and the war in Ukraine continues, which in addition to the huge humanitarian crisis for Ukrainians, has large potential effects on geopolitics and the global economy." CEO Jamie Dimon said.

Wells Fargo

  • Revenue was $20.53 billion vs $20.12 billion expected.

  • EPS came in $1.25 vs $1.16 expected.

  • Provision for credit losses was up 195% Y/Y and 46% Q/Q to $1.71 billion.

  • Net interest income was $13.2 billion(+29% Y/Y), but was down 1% Q/Q. The company said it expects it to rise 14% in 2023 instead of its earlier projection for 10% growth.

  • Net interest margin was 3.09% versus 3.20% in Q1 2023 and 2.39% in Q1 2022.

  • Average deposits was $1,347.4 billion(-6.8% Y/Y).

  • Average Loans was $ 945.9 billion (+2% Y/Y).

  • Net loan charge-offs grew 122% y/y to $764 billion.

  • CEO Charlie Scharf said that the U.S economy continues to perform better than expected.

    “The U.S. economy continues to perform better than many had expected, and although there will likely be continued economic slowing and uncertainty remains, it is quite possible the range of scenarios will narrow over the next few quarters,” he said.

Citi Group

  • Revenue came in $19.44 billion vs. $19.29 billion estimate.

  • EPS was $1.33 vs. $1.30 estimate.

  • Provision for credit losses declined 57% y/y and 33% Q/Q to $161 million.

  • Net interest margin was 2.48% versus 2.41% in Q1 2023 and 2.24% in Q2 2022.

  • Deposits declined 1% Q/Q to $1.32 billion.

  • Loans grew 1% Q/Q to $661 billion.

    “Amid a challenging macroeconomic backdrop, we continued to see the benefits of our diversified business model and strong balance sheet,” CEO Jane Fraser said in the press release.

    Bank Earnings:Historical Results/2023 Q2 - InvestmentWiki

1 Like
3

I=6

Today, Bank of America and Morgan Stanley reported revenue that came in-line with estimates and earnings that topped estimates. Here is a summary of their results;

Bank of America

  • Revenue was $25.33 billion versus $25.05 billion estimate.

  • EPS came in 88 cents vs. 84 cents estimate.

  • Provision for credit losses grew 120% y/y and 22% Q/Q to $1.1 billion.

  • Its deposits were $1.9 trillion(-7% Y/Y and -1% Q/Q).

  • Its loans were $1.05 trillion(+3% Y/Y and +0.9% Q/Q).

  • It incurred net charge-offs of $869 milion(+52% Y/Y and +7.6% Q/Q).

Morgan Stanley

  • Revenue was $13.46 billion versus $13.08 billion estimate.

  • EPS was 1.24 versus 1.15 estimate.

  • Provision for credit losses was $161 million(+59% Y/Y and -31% Q/Q).

  • Deposits were $349 billion(+0.6% Y/Y and 0.2% Q/Q).

  • Loans were $224 billion(+5% Y/Y and +1% Q/Q).

    Bank Earnings:Historical Results/2023 Q2 - InvestmentWiki

2 Likes
4

I=7

  • EPS of State Street Bank, Bank of New York Melon, Charles Schwab, and PNC Financial,
    topped estimates. Only revenue of PNC Financial missed estimates.

  • The four banks saw their deposits decline by an average of 2.5% Q/Q.

  • Net interest margins for the four banks declined sequentially by an average of 14.5 basis points.

Bank Earnings:Historical Results/2023 Q2 - InvestmentWiki

1 Like
5

I also saw their loans are not growing anymore. While Big banks still reported growth. Those deposits outflows will continue to weigh on their derisk decisions.

As reference: Small- and medium-size banks play an important role in the American economy. Lenders with less than $250 billion in assets account for roughly 50% of U.S. commercial and industrial lending, 60% of residential real estate lending, 80% of commercial real estate lending and 45% of consumer lending,

1 Like