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JPMorgan Chase (JPM) and his giant colleague at the Dow Jones Goldman Sachs (GS) topped second-quarter estimates ahead of Tuesday’s open, even though both saw trading revenues come out of strong first-quarter results. JPMorgan and Goldman shares edged down.
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Big bank stocks have recently come under pressure as Treasury yields decline, as trading income normalizes after volatility fueled by the pandemic. But the sustained pace of IPOs and mergers and acquisitions has bolstered the investment banking results.
Meanwhile, the latest Federal Reserve stress test results have paved the way for larger dividends and major bank share buybacks.
JPMorgan Results
Estimates: JPMorgan profits soared 121% to $ 3.05 a share, but sales are expected to fall 9% to $ 29.98 billion.
Results: JPMorgan’s profits reached $ 3.78 per share with revenues of $ 30.5 billion. The banking giant released $ 3 billion in loan loss reserves, increasing the bottom line.
Trading revenue was $ 6.8 billion, with fixed income trading revenue down 44% from a year earlier, while stock trading was up 12%. In June, CEO Jamie Dimon warned that second-quarter trading revenue would drop to just over $ 6 billion, from $ 9 billion in the first quarter.
Community bank revenues increased 3% to $ 12.8 billion. Income from the investment bank rose 1% to $ 3.4 billion. Revenues of commercial banks rose 3% to $ 2.5 billion. Wealth management revenues jumped 20% to $ 4.1 billion.
Store: Shares fell 2.7% to 153.69 in the stock market today. JPMorgan stock has a buy point of 167.54 from a flat base, but has reached resistance at the 50 day line, according to MarketSmith chart analysis.
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Goldman Sachs earnings
Estimates: Zacks Investment analysts expected Goldman Sachs earnings per share of $ 9.57, 53% higher than a year ago. They saw their revenues drop 14% to $ 11.46 billion.
Results: Goldman Sachs earnings per share jumped to $ 15.02 as revenues hit $ 15.39 billion. Goldman released $ 92 million in credit reserves.
The investment banking income jumped 36% to a record $ 3.61 billion, helped by a booming IPO market. Asset management was also strong. Income from fixed income trading jumped 45% to $ 2.3 billion, while equity trading fell 12% to $ 2.6 billion. Combined trading revenue of $ 4.9 billion fell sharply from $ 7.6 billion in the first quarter.
Asset management revenues more than doubled to $ 5.1 billion. Wealth management climbed 28% to $ 1.75 billion.
Store: GS stock slipped 1.4% to 375.27 but held above the 50-day line. The weekly stock chart shows a buy point of 393.36 from a flat base.
Meanwhile, Bank of America (BAC), Citigroup (C) and Wells fargo (WFC) reports Wednesday.
Bank stocks increase payments
Big banks are returning capital to shareholders again without most of the restrictions of the pandemic era after passing stress tests.
JPMorgan last month raised its quarterly dividend to $ 1 per share, from 90 cents after launching a $ 30 billion share buyback plan in the first quarter.
Goldman Sachs increased its dividend to $ 2 per share from $ 1.25 but did not announce a new buyback program.
Morgan Stanley said it is doubling its dividend to 70 cents per share and plans to repurchase up to $ 12 billion in shares.
Bank of America increased its dividend to 21 cents per share from 18 cents and announced a $ 25 billion buyout plan in April.
Wells Fargo doubled its dividend to 20 cents after cutting it by 51 cents last year, and OK’s $ 18 billion buyout. Meanwhile, Citigroup kept its payment stable at 51 cents.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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