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The third-quarter earnings are expected to start on Friday, with some of the nation's biggest banks delivering their first steps, but lost some of their shine as the trading session progressed.
That's a pattern that has broken down this year, as many numbers have failed to boost prices. The Financial Select Sector SDPR Fund
XLF, -0.98%
has fallen 5.4% in 2018 to date, while the Invesco KBW Bank ETF
KBWB, -2.25%
has fallen 5.9%. That compares with the S & P 500's
SPX, + 0.45%
3% gain in the period, and the Dow Jones Industrial Average's
DJIA, + 0.24%
1.9% gain.
JPMorgan Chase & Co., Chief Financial Officer Marianne Lake, "The uncertainty of macro uncertainty" and the fact that it is "over-the-counter".
"Overthinking any one driver or conclusion might be challenging," she told analysts, according to a FactSet transcript. "As we look at the economy, we do not see it slowing down. It seems to be continuing to grow pretty solidly. "
JPMorgan is expecting the global economy to start converging with the U.S. going forward, she said. Meanwhile, the U.S. is lining up for a 2019, which means the continuation of a yield curve- "and that should all be constructive for bank stocks," she said.
Mark Doctoroff, global co-head of the Financial Institutions Group at MUFG, agreed, and said bank stocks have been viewed by investors since the financial crisis.
"But we're in a really good environment," he said. "The consumer is healthy, corporate credit is healthy, there are little to no credit losses. There's been talk about slow loan growth, but that's not the banks' fault. It's the evolution of the market that is a lot of nonbankers from now on, from BDCs to private-equity to even asset managers. Overall, there is loan growth, it's just not only at banks. "
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Macro issues are also some unease, Doctoroff said, those, too, are looking overdone.
"The trade talks and renegotiation of deals have raised uncertainty," he said. "Those are not having a huge impact now, but they could.
"There's uncertainty about prices, about emerging markets and currency moves. But the reality is the U.S. banks are generating more capital than ever and are winning market share in Europe, where things like Brexit are playing into their hands. "
JPMorgan Chase & Co.
JPM, -1.91%
beat analyst estimates, a financial management position has been weakened by Chief Financial Officer Marianne Lake.
See: Chase is now offering 60,000 points on a check account, but there's a big catch
The net reported net income of $ 8.38 trillion, or $ 2.34 a share, in the quarter, up from $ 6.73 trillion, or $ 1.76 a share, in the year-earlier period. Revenue rose to $ 27.8 billion from $ 26.5 billion. The FactSet consensus was for $ 2.26 and $ 27.4 million.
Net interest income rose 75 to $ 14.1 billion, mostly due to higher rates. Noninterest income rose 3% to $ 13.8 billion, driven by higher market noninterest income and auto lease income, offset by markdowns on legacy private-equity investments.
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Noninterest costs rose 7% to $ 15.6 billion, as the bank invested in business, technology, marketing and real estate. Provisions for loans that can reach $ 948 million from $ 1.5 billion, driven by the consumer portfolio.
The company made $ 22.5 billion in mortgage loans in the quarter, down from $ 26.9 billion a year ago.
The retail bank had net income of $ 4.09 billion, up from $ 2.55 billion a year ago. The corporate and investment bank had net income of $ 2.626 billion, up from $ 2.546 billion a year ago. The commercial bank had net income of $ 1.089 billion, up from $ 881 million, and the asset and wealth management business had net income of $ 724 million, up from $ 674 million.
At Citigroup Inc.
C + 0.52%
net income rose 12% to $ 4.62 trillion, or $ 1.73 a share, from $ 4.13 trillion, or $ 1.42 a share, in the same period a year ago. Revenue was flat at $ 18.4 billion. The FactSet consensus was for EPS of $ 1.68 and revenue of $ 18.5 billion.
Trading revenue rose 7% to $ 3.99 billion, led by a 9% gain in fixed income trading. But investment-banking income fell 8% to $ 1.18 billion, due to lower equity and debt issuance.
Institutional client income was 2% from a year ago, mainly due to a large gain on the fixed-income data in the year-earlier period. Treasury and trade solutions rose 4%.
Revenue at the bank's global retail bank rose 2%, boosted by a 20% gain in Mexico, after the sale of an asset-management unit. North American retail banking revenue fell 1%. Card revenue fell 3% to $ 2.2 billion.
The bank's loan book grew 3% to $ 675 billion in the quarter. Pink Deposits 4% to $ 1.0 trillion.
At Wells Fargo
WFC -0.10%
net income rose to $ 6.0 trillion, $ 1.13 a share, from $ 4.5 trillion, or 83 cents a share, in the year-earlier period. Revenue rose to $ 21.9 billion from $ 21.8 billion. The FactSet consensus was for EPS of $ 1.19 and revenue of $ 21.8 billion.
Read also: Wells Fargo readies its first post-crisis mortgage bonds
Net interest income rose to $ 12.6 billion from $ 12.4 billion while noninterest income rose by $ 357 million to $ 9.4 billion. The bank's deposits fell 3% to $ 1.3 trillion, while loans fell 1% to $ 939.5 billion.
Mortgage banking income rose to $ 846 million, up $ 76 million from a year ago.
JPMorgan shares were down 1.7% in early afternoon trade. Citi was up 0.6% and Wells Fargo was down 0.1%.
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