Over the last five trading days, Q1 earnings season commenced with a bang for the banking stocks. Earnings reports from some mega banks reflect easing margin pressure and continued expense management.
Moreover, banks reported a rise in trading income as heightened uncertainty related to potential policy changes led to a significant rise in client activity. Also, investment banking fees seem to be rebounding. However, mortgage banking income witnessed a downtrend.
Further, all the big banks recorded a rise in loan balance, despite industry-wide dismal expectations. Additionally, driven by reserve releases, provisions for loan losses reported a fall during the quarter.
Nonetheless, the investors’ reaction was not in line with the results as banks’ share price performance was bearish over the last five trading sessions. This perhaps reflects investors’ discontent with the outlook provided by the banks.
(Read: Bank Stock Roundup for the week ending Mar 31, 2017)
Important Earnings of the Week
1. Impressive investment banking and trading revenues drove JPMorgan Chase & Co.’s JPM first-quarter 2017 earnings of $1.65 per share, which handily outpaced the Zacks Consensus Estimate of $1.51. Moreover, results were supported by a fall in provision for credit losses, strong loan growth and higher interest rates. (Read more: JPMorgan Q1 Earnings Easily Beat with Surprising Loan Growth)
2. Driven by net interest income, Wells Fargo & Company’s WFC first-quarter 2017 earnings of $1.00 per share outpaced the Zacks Consensus Estimate of 97 cents. The company witnessed organic growth aided by strong loans and deposit balances. Higher net interest income was also a positive. However, higher expenses and lower non-interest income were concerns. (Read more: Wells Fargo's Q1 Earnings Beat on High Interest Income)
3. Citigroup Inc. C delivered a positive earnings surprise of 8.9% in first-quarter 2017, riding on higher revenues. The company’s earnings per share of $1.35 outpaced the Zacks Consensus Estimate of $1.24. Notably, results reflect one-time adjustments of 1 cent. The quarter witnessed rise in overall revenues, driven by higher market revenues, supported by an improved trading environment. Moreover, results reflected prudent expense management. (Read more: Citigroup Beats on Q1 Earnings, Trading Revenues Climb)
4. Riding on high revenues, The PNC Financial Services Group, Inc. PNC recorded earnings per share of $1.96, which significantly beat the Zacks Consensus Estimate of $1.84. Results benefited from a rise in revenues driven by growth in loans and deposits. However, an increase in expenses was an undermining factor. (Read more: PNC Financial Beats on Q1 Earnings, Costs Increase)
5. Bank of the Ozarks, Inc.’s OZRK first-quarter 2017 earnings of 73 cents per share beat the Zacks Consensus Estimate of 71 cents. An increase in both net interest income and non-interest income drove the better-than-expected results. However, the company witnessed an increase in expenses during the quarter, along with a significant rise in provision for loan and lease losses. (Read more: Bank of the Ozarks Beats on Q1 Earnings, Revenues Up)
Here is how the seven major stocks performed:
In the last five trading sessions, Wells Fargo and Bank of America Corporation BAC were the major losers, with their shares declining 6.4% and 3.5%, respectively. Moreover, Capital One Financial Corp. COF fell 3%.
BofA and The PNC Financial Services Group, Inc. PNC were the best performers in the last six months, with their shares surging a whopping 41.1% and 31.7%, respectively. Further, JPMorgan’s shares increased 24.6%.
This week Q1 earnings for banks will continue full throttle. Among the major banks reporting on Apr 18 are BofA, Comerica Inc. CMA and Regions Financial Corp. RF while U.S. Bancorp USB is scheduled to report on Apr 19.
Further, BB&T Corporation BBT, The Bank of New York Mellon BK and KeyCorp KEY are slated to announce results on Apr 20 and SunTrust Banks, Inc. STI will come up with its release on Apr 21. Price performance of banking stocks will largely depend on the upcoming results and management guidance.
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J P Morgan Chase & Co (JPM): Free Stock Analysis Report
BB&T Corporation (BBT): Free Stock Analysis Report
PNC Financial Services Group, Inc. (The) (PNC): Free Stock Analysis Report
Comerica Incorporated (CMA): Free Stock Analysis Report
U.S. Bancorp (USB): Free Stock Analysis Report
SunTrust Banks, Inc. (STI): Free Stock Analysis Report
KeyCorp (KEY): Free Stock Analysis Report
Bank Of New York Mellon Corporation (The) (BK): Free Stock Analysis Report
Wells Fargo & Company (WFC): Free Stock Analysis Report
Citigroup Inc. (C): Free Stock Analysis Report
Bank of America Corporation (BAC): Free Stock Analysis Report
Regions Financial Corporation (RF): Free Stock Analysis Report
Bank of the Ozarks (OZRK): Free Stock Analysis Report
Capital One Financial Corporation (COF): Free Stock Analysis Report
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