After making less-than-stellar headlines in the past couple of months following the banking crisis, this week, big banks are making a comeback with their earnings reports. From JPMorgan Chase (JPM) to Wells Fargo (WFC), and Citigroup (C), here are this week’s anticipated big bank earnings, and here’s what you can expect from them:
Big Banks’ Trajectories: A Brief Recap
It is no secret that some of the biggest names in the banking industry have suffered in the past couple of months following the announcement of Silicon Valley Bank’s (SVB) bankruptcy on the 10th of March, which was succeeded by other major banks’ turmoils.
Since SVB’s collapse, big banks JPMorgan, Wells Fargo, and Citigroup slid by 4.6%, 8.3%, and 5.1% as fears of a recession arose and investors may have been apprehensive about the future of the banking industry.
Moreover, more recently, these fears and market jitters may have been intensified by JPMorgan CEO, Jamie Dimon’s, remarks on the banking crisis. On April 4th, in a letter to JPMorgan’s shareholders, Dimon revealed that the banking crisis may be far-from-over and that its effects could still send ripples across the markets in the near future.
Dimon elaborated that SVB’s and Signature Bank’s collapse last month, in addition to Credit Suisse’s (CSGN.VX) emergency purchase by its rival UBS (UBSG.VX) not only created market jitters but might also cause lenders to withdraw funds, which can increase the risk of a possible recession. He also said that the effects of this crisis on US consumers are yet to be seen and that the fact that many, including US President, Joe Biden, have been calling on increasing regulatory scrutiny over the banking system, may only add to the possibility of continued banking pressures.
Nonetheless, Dimon went on to explain that while the crisis is not over yet, he believes that it will not be as harsh as 2008’s financial crisis.
Accordingly, following these remarks, now more than ever, traders may want to keep an eye out on this week’s upcoming earnings reports to see how big banks are faring and to see if Dimon’s apprehensions will hold true.
JPMorgan & Citigroup Stand Firm in Face of the Banking Crisis?
On Friday, the 14th of April, Q1 2023’s earnings season comes in full swing with the American multinational banks JPMorgan's and Citigroup’s expected financial report. Despite the recent economic downturn in general and the banking turmoil in particular, the outlook for JPMorgan’s and Citigroup’s upcoming earnings is more positive than one might expect.
According to analyst estimates, JPMorgan is expected to report revenue growth and a YoY earnings increase for Q1 2023. In addition, some analysts expect the bank to report an EPS of $3.40 and revenue of $35.37 billion. If these numbers do materialize, then this will be a revenue growth of 15.2% compared to 2022’s Q1, and the EPS would be higher by 29.3$ YoY.
As for Citigroup, some analysts believe that the big bank might have higher revenues of $19.92 billion which would be 3.8% higher than Q1 2022’s numbers. However, earnings per share are expected to come in at $1.67 compared to last year’s quarter's $2.02 Nonetheless, the consensus seems to be that the company will likely beat expectations on Friday’s scheduled earnings release.
If the banks’ earnings beat expectations, then the market might, perhaps unsurprisingly, react positively and vice versa. (Source:Yahoo Finance)
Wells Fargo’s Expected Growth
Wells Fargo is another big bank that might show that it withstood the recent economic headwinds in Friday’s upcoming Q1 2023’s earnings reports.
This is because, similar to JPMorgan’s forecast, the market expectations for the financial behemoth seem to be that it would report a YoY earnings growth and higher revenues. In addition, the largest mortgage lender in the US is expected to report an EPS of $1.16 which is a 31.8% YoY, while revenues are expected to have grown by 15.6% compared to last year’s quarter’s figures to land in at $20.33 billion.
To sum it up, as it stands, analysts seem positive about these big banks’ upcoming earnings reports, despite the recent economic hurdles and banking sectors’ crisis. Accordingly, if these positive projections hold true, then the market may be able to recoup some of the losses incurred over the past couple of months. If not, then Dimon’s recession apprehensions may intensify and the markets may be more volatile than ever.
It might, therefore, be prudent to keep track of Friday’s upcoming earnings data, and in addition, keep an eye out for any upcoming financial reports that might affect the markets. This week, in particular, the Fed’s FOMC minutes and US CPI data are expected to be reported on Wednesday, and both of these economic reports can shift the course of the markets.