A jumbled week of bank earnings

Investors are seeing a mixed bag of quarterly results as banks reel from weak trading revenue.

By Kim Peterson Jan 18, 2012 4:09PM
Image: Bank Vault (© Radius Images/Jupiterimages)Bank of America (BAC) is next up in what's turning out to be a series of unpredictable earnings reports this week.

And if the other reports are any indication, Bank of America's earnings report Thursday may not be pretty. Many of the nation's largest banks and regional banks reported declines for the fourth quarter, battered by weak trading revenue.

Citigroup (C) announced an unexpected drop in fourth-quarter earnings this week as trading revenue declined. The stock was climbing nearly 3% Wednesday afternoon after falling earlier this week. JPMorgan Chase (JPM) also had bad news, saying its investment-banking business was down across the board. The stock was up more than 4% Wednesday after also seeing a drop on Tuesday.

Bank of New York Mellon (BK) also disappointed investors as profit fell 26% to 42 cents a share. Analysts were looking for 53 cents a share. The stock was down 5% Wednesday afternoon.

But there were some bright stars. Wells Fargo (WFC) beat analyst projections on revenue and profit. The bank saw increases in deposits and commercial lending as its mortgage unit stabilized. Shares were up 1% Wednesday afternoon.

Goldman Sachs (GS) also surprised with better results than expected, even though its profit fell by 58%. The investment company was able to cut costs enough that its earnings were $1.81 a share. The company depends more on trading and investment banking than others, and analysts -- sensing a rough business in those areas -- were only expecting $1.46 a share.

Investors responded by sending Goldman's stock price up more than 7% Wednesday.

And one of the brightest earnings stories this week came from US Bancorp (USB), a regional bank that beat estimates with $1.35 billion in earnings, or 69 cents a share. Analysts were expecting 63 cents. Fourth-quarter net revenue jumped 8% from a year earlier. Shares were up less than 1% Wednesday.

Other regional banks didn't fare as well. PNC Financial Services Group (PNC) shares fell more than 3% after saying its fourth-quarter profit fell to $493 million from $820 million a year earlier. Revenue also dropped to $3.5 billion from $3.9 billion. At least the money the bank set aside for bad loans dropped by 27% to only $190 million -- good news after what the industry has been through.

Morgan Stanley (MS) will report earnings Thursday, and Fifth Third Bancorp (FITB) will report on Friday, and Regions Financial (RF) is set to report next week.

Analysts are expecting a slight profit for Bank of America, whose shares have been pummeled by bad news over the last year. Wall Street wants to see earnings of 21 cents to 23 cents a share for the quarter -- a jump from the 4 cents reported a year earlier.

Investors seem to be confident of a solid earnings report. Bank of America shares were up 4% Wednesday to $6.74. Shares have risen 16% so far this year.



Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
262 rated 2
480 rated 3
651 rated 4
649 rated 5
629 rated 6
616 rated 7
496 rated 8
346 rated 9
111 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.