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Bank earnings show strong industry rebound

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Yahoo Finance’s Julia La Roche breaks down Wednesday’s bank earnings for Wells Fargo, JPMorgan, and Goldman Sachs.

Video Transcript

ALEXIS CHRISTOFOROUS: I want to switch gears here for a moment and talk about some more traditional companies, talking about the banks. They kicked off their earnings season today with some pretty strong results. We heard from Goldman Sachs, JPMorgan Chase, and Wells Fargo. And while each of them were different, there were some common themes throughout. Yahoo Finance's Julia La Roche is here now to break it all down for us. Julia.

JULIA LA ROCHE: Yeah, some really impressive numbers coming from JP Morgan and Goldman Sachs when it relates to investment banking, also, trading activity. Just to kind of walk folks through what happened with JP Morgan, they reported adjusted earnings per share in the first quarter of $4.50. That beat estimates of just $3.05, while revenue also topped expectations, coming in at $32.3 billion, compared to estimates of $30.42 billion. The bank earned in the quarter $14.3 billion in net income. That is up by $11.4 billion from the year prior. A lot of that was driven, of course, Alexis, by the credit reserve releases of $5.2 billion, which also lifted the earnings per share number that I referenced earlier, lifted up by $1.28.

JP Morgan CEO Jamie Dimon did have some commentary about the credit reserves. He said that $26 billion figure is appropriate and prudent, all things considered. He also echoed his upbeat commentary, just given last week, on the US economy. Remember, he had talked about a multiyear growth that could happen. He did make some comments about loan demand that got quite a bit of attention that that has remained, quote, "challenged."

I was on the earnings call for reporters. And he said, quote, "I think I made a mistake in my quote using the word 'challenge.' What happened is the consumer has so much money that they're paying down their credit card loans, which is good. Their balance sheet is excellent and in outstanding shape." He also said consumers are ready to go. They're starting to spend money. And that's not the same as loan demand when the economy is weak.

Now, turning over to Goldman Sachs, wow, they had a record quarter when it comes to its quarterly revenues of $17.7 billion. That is more than double from the first quarter a year ago. Adjusted earnings per share beating expectations, coming in at 18.6 bill-- oh, it was $18.60. Sorry, not billion. $18.60 compared to estimates of $10.07 per share, and they just had-- their businesses were quite strong, especially investment banking coming in at $3.77 billion, driven by that equity underwriting hitting records. Alexis.