Wrapping up Q3 earnings, we look at the numbers and key takeaways for the diversified banks stocks, including JPMorgan Chase (NYSE: JPM) and its peers.
At their core, diversified banks take in deposits and engage in various forms of lending, which means revenue is generated through interest rate spreads (difference between loan and deposit rates) and fees. Other revenue comes from adjacent services such as wealth management, card and account fees, and products such as annuities. These institutions benefit from rising interest rates that improve NIMs (net interest margins), digital transformation reducing operational costs, and expanding wealth management services as populations age. However, they face headwinds including fintech competition disrupting traditional models (how disruptive is crypto?), stringent regulatory requirements increasing compliance costs, and cybersecurity threats requiring substantial technology investments. Economic downturns also pose risks through potential loan defaults and compressed margins during accommodative monetary policy periods.
The 7 diversified banks stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.4%.
In light of this news, share prices of the companies have held steady as they are up 3.6% on average since the latest earnings results.
JPMorgan Chase (NYSE: JPM)
Tracing its roots back to 1799 when its earliest predecessor was founded by Aaron Burr, JPMorgan Chase (NYSE: JPM) is a leading financial services company offering investment banking, consumer banking, commercial banking, and asset management services globally.
JPMorgan Chase reported revenues of $47.12 billion, up 8.8% year on year. This print exceeded analysts’ expectations by 4.1%. Overall, it was a satisfactory quarter for the company with a solid beat of analysts’ revenue estimates but a slight miss of analysts’ net interest income estimates.
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $305.12.
Is now the time to buy JPMorgan Chase? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Citigroup (NYSE: C)
With operations in nearly 160 countries and a history dating back to 1812, Citigroup (NYSE: C) is a global financial services company that provides banking, investment, wealth management, and payment solutions to consumers, corporations, and governments.
Citigroup reported revenues of $22.09 billion, up 9.3% year on year, outperforming analysts’ expectations by 4.6%. The business had an exceptional quarter with an impressive beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.
Citigroup pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 5.4% since reporting. It currently trades at $101.30.
Is now the time to buy Citigroup? Access our full analysis of the earnings results here, it’s free for active Edge members.
Slowest Q3: Truist Financial (NYSE: TFC)
Born from the 2019 merger of BB&T and SunTrust in one of the largest banking combinations since the 2008 financial crisis, Truist Financial (NYSE: TFC) is a bank holding company that offers a wide range of financial services including consumer and commercial banking, wealth management, insurance, and lending solutions.
Truist Financial reported revenues of $5.19 billion, flat year on year, exceeding analysts’ expectations by 0.7%. Still, it was a mixed quarter as it posted a slight miss of analysts’ net interest income estimates.
Truist Financial delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 7.9% since the results and currently trades at $44.33.
Read our full analysis of Truist Financial’s results here.
Wells Fargo (NYSE: WFC)
Founded during the California Gold Rush in 1852 to provide banking and express delivery services to miners and merchants, Wells Fargo (NYSE: WFC) is a diversified financial services company that provides banking, lending, investment, and wealth management services to individuals and businesses.
Wells Fargo reported revenues of $21.44 billion, up 5.3% year on year. This print surpassed analysts’ expectations by 1.5%. More broadly, it was a satisfactory quarter as it also produced a beat of analysts’ EPS estimates but a slight miss of analysts’ net interest income estimates.
The stock is up 9.9% since reporting and currently trades at $86.75.
Read our full, actionable report on Wells Fargo here, it’s free for active Edge members.
PNC Financial Services Group (NYSE: PNC)
Tracing its roots back to 1852 when Pittsburgh's industrial boom demanded stronger financial institutions, PNC (NYSE: PNC) is a diversified financial institution that provides retail banking, corporate banking, and asset management services through a coast-to-coast branch network.
PNC Financial Services Group reported revenues of $5.92 billion, up 8.9% year on year. This result topped analysts’ expectations by 1.8%. It was a strong quarter as it also logged an impressive beat of analysts’ tangible book value per share estimates and a decent beat of analysts’ revenue estimates.
The stock is down 4.1% since reporting and currently trades at $182.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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