A jumbled week of bank earnings
Investors are seeing a mixed bag of quarterly results as banks reel from weak trading revenue.
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.
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The company has made at least 4 acquisitions in the space, and few people have paid any attention.
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