Overview Q3 2024 Bank Earnings
Q3 2024 Big Bank earnings exceeded expectations. Net interest income remains under pressure, while investment income rises significantly.
- JPMorgan said profit fell 2% from a year earlier to $12.9 billion, while revenue climbed 6% to $43.32 billion.
- Bank of America’s net income fell 12% from a year earlier to $6.9 billion, or 81 cents a share, on higher provisions for loan losses and rising expenses. Revenue rose less than 1% to $25.49 billion as gains in trading revenue, asset management and investment banking fees offset a decline in net interest income.
- Citi’s net income fell to $3.2 billion (-8.6%), or $1.51 per share, from $3.5 billion, or $1.63 per share, a year earlier. Earnings were hurt by a higher cost of credit. Revenue rose 1% to $20.32 billion from $20.14 billion a year ago. Contributing to the increase was an 18% jump in banking revenue
- Goldman Sachs profit surged 45% from a year earlier to $2.99 billion, or $8.40 per share, as revenue climbed 7% to $12.7 billion.
- Wells Fargo saw net income fall to $5.11 billion (-11.4%), or $1.42 per share, in the third quarter, from $5.77 billion, or $1.48 per share, during the same quarter a year ago. Revenue dipped to $20.37 billion from $20.86 billion a year ago.
Most banks report that consumer spending remains healthy.
- Bank of America: consumer payments is an indicator of activity. Those payments were up 4% to 5% year-over-year for the quarter in the total money those consumers moved in the economy.
This growth in consumer payments continues into October. This activity is consistent with how customers are spending money in the 2016 to 2019 timeframe.
- Citi: Our customers are healthy, but more discerning in their spend with signs of stress isolated to the lower FICOs.
- JPM: we’re not seeing weakening, for example, in retail spending. So overall, we see the spending patterns as being sort of solid and consistent with the narrative that the consumer is on solid footing and consistent with the strong labor market
- Wells Fargo: Both credit card and debit card spend were up in the third quarter from a year ago. And although the pace of growth has slowed, it is still healthy.
Banks also report consumer credit quality remains healthy, though some institutions note that certain segments of consumers, especially those with lower incomes, are exhibiting signs of stress.
- Bank of America: Net charge-offs of $1.5 billion were flat compared to Q2. We’ve seen consumer losses in a pretty tight range for a few quarters now.
- Wells Fargo:Consumer charge-offs declined from the second quarter, driven by lower losses in our credit card portfolio, while our other consumer portfolios continue to perform well, reflecting the benefit of prior credit tightening actions. We continue to look for changes in consumer health, but we have not seen meaningful changes in trends when looking at delinquency statistics across our consumer credit portfolios.
Continue to see more pronounced stress in certain customer segments with lower deposit and asset levels, where inflation has partially offset strong employment and wage growth.
- JPM: Net charge-offs of $1.9 billion were up $520 million, driven by Card Services, primarily due to the seasoning of newer vintages and continued credit normalization. The net reserve build was primarily in Card Services, driven by growth in revolving balances and changes in certain macroeconomic variables.
- Citi: Sequentially, NCLs declined while delinquencies increased, both in line with historical third-quarter seasonality. Absent this seasonality, we continue to see stabilization in early-stage delinquencies.
The commercial real estate segment continues to be weak, especially in the office sector, but losses have declined.
- JPM: In multifamily, while we are seeing encouraging signs in loan originations as long term rates fall, we expect overall growth to remain muted in the near-term as originations are offset by payoff activity.
- Bank of America: saw lower losses from office exposure and otherwise we had two somewhat unrelated commercial losses. The net charge off ratio was 58 basis points, down one basis point from Q2.
- Wells Fargo: While losses in the commercial real estate office portfolio declined in the third quarter, market fundamentals remained weak, and we still expect commercial real estate office losses to be lumpy, as we continue to actively work with our clients.
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