3 Big Banks Earnings Reports Show It’s Not a One-Size-Fits-All Market Anymore
19 Janeiro 2022 - 6:07AM
Finscreener.org
Investors experienced a broad
rally in bank stocks since the bear market of 2020. It is unlikely
that the same will continue in 2022. Three of the
largest banks in the US
reported their Q4 and full-year 2021
results on January 14, and the numbers will make investors take a
hard look before diving in.
JPMorgan Chase
JP Morgan (NYSE:
JPM) reported mixed
figures for Q4 of 2021 but had a huge correction after its results
were published. Its adjusted earnings per share stood at $3.33
compared to consensus estimates of $2.97. Revenue came in at $29.3
billion compared to estimates of $29.5 billion. The market reacted
badly to the earnings miss and JPMorgan stock fell 6.15 on
Friday.
It didn’t help that expenses at
the bank for 2021 came in at $17.9 billion, up $1.8 billion or 11%,
“largely on higher compensation”. Of this, $7.8 billion was
recorded in the last quarter. For Q4, markets revenue was down $5.3
billion or 11%. Fixed income was down 16% year-on-year reflecting a
more difficult trading environment. As the economic uncertainty of
the last two years starts tapering down, trading has taken a
hit.
The bank’s loan growth was up 6%
in Q4 which suggests that loans are starting to pick up again after
three flat quarters. JPMorgan’s Q4 net income fell to $10.4 billion
from $12.14 billion in Q4 2020. These numbers include a benefit of
$1.8 billion which were held as credit reserves.
Despite the headwinds, analysts
have a target of $181.07 for the bank which represents a potential
upside of almost 14.7% from current levels.
Citigroup
Citigroup (NYSE: C)
reported
a 26% drop in net profit
for Q4 of 2021 as net income fell to
$3.2 billion. Citigroup said an increase in expenses resulted in
the decline. It also said that its numbers included a $1.2 billion
“pre-tax impact” related to the sale of its consumer banking
businesses in Asia.
For 2021, the bank’s net income
almost doubled to $21.95 billion compared to 2020. Full year
revenue, however, declined 5% to $71.88 billion. Its global
consumer banking business saw revenue fall 6% to $6.94 billion
compared to 2020. Its investment banking business saw a 43% jump in
revenue.
The bank is undergoing major
restructuring after Jane Fraser took over as CEO in March 2021 as
the heavyweight has been divesting its non-US consumer businesses.
Last week, Citigroup said that it would wind up its consumer bank
in Mexico and that it would be selling its retail businesses in
Indonesia, Malaysia, Thailand and Vietnam to Singapore-based lender
United Overseas Bank.
Analysts have a $80.47 average
target for the stock which is a potential upside of over
20%.
Wells Fargo
Wells Fargo (NYSE:
WFC) earned $21.5 billion
or $4.95 per share in 2021. Expenses for the whole year fell 7% and
deposits increased 6%. In Q4, the bank saw consumer credit card
growth move up 28% compared to the corresponding period in 2020.
The bank said it seemed like Omicron hasn’t affected overall
consumer spending.
It explained, “All spending
categories were up in the fourth quarter compared to a year ago,
with the largest increases in travel, fuel, entertainment and
dining. Weekly debit card spend during the fourth quarter was up
every week compared to both 2019 and 2020.” However, loan balances
fell 3% compared to 2020.
Wells Fargo said that it expects
net interest income to rise approximately 3% in 2022 from $35.8
billion in 2021 to about $38.66 billion. These numbers beat analyst
estimates and the bank’s stock surged 3.68% after the numbers came
out. However, the average analyst target for the bank’s stock is
$57.21. The bank closed on January 14 at $58.06.
Citigroup (NYSE:C)
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