Bank Earnings Preview: Cautious Outlook As JPMorgan, Citigroup, BofA And Wells Fargo Report On Friday
Portfolio Pulse from Neil Dennis
Top U.S. banks JPMorgan, Citigroup, Bank of America, and Wells Fargo are set to report Q4 earnings on Friday with mixed expectations. Deloitte's 2024 outlook suggests a challenging year for financial services due to economic slowdown, rate cuts, geopolitical tensions, and assertive regulations. Disruptive technologies and other factors like GenAI and digitization will also impact the industry. Last year, KBE gained 3.2%, while SPY gained 16%. Zacks estimates vary for each bank, with JPM expected to post higher earnings and revenue, C to see a decline in earnings but increased revenue, BAC to have lower earnings and revenue, and WFC to report significant earnings growth with slightly higher revenue. Fitch Ratings maintains a deteriorating outlook for banks in 2024, while S&P Global sees steady outlook based on solid fundamentals, and Moody's holds a negative view due to a sluggish growth environment.
January 09, 2024 | 1:54 pm
News sentiment analysis
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NEGATIVE IMPACT
Bank of America is expected to see a 20% decrease in earnings per share and a 2.3% drop in revenue. The stock had a modest 1.5% gain in 2023.
Expected declines in both earnings and revenue could negatively affect BAC's stock price in the short term.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 85
NEUTRAL IMPACT
Citigroup's earnings are expected to decline by 5.5%, but revenue is projected to increase by 6%. The stock was up 13.7% in 2023.
Mixed expectations with a decline in earnings but increased revenue may lead to a neutral short-term impact on Citigroup's stock.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
SPDR S&P Bank ETF (KBE) gained just 3.2% over the year, underperforming the SPDR S&P 500 ETF (SPY) which gained 16%.
KBE's performance is tied to the banking sector, and mixed earnings reports could lead to a neutral short-term impact.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
SPDR S&P 500 ETF (SPY) outperformed the banking sector with a 16% gain compared to KBE's 3.2%.
SPY's broader market exposure means bank earnings have a diluted impact, leading to a neutral short-term effect.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50
POSITIVE IMPACT
JPMorgan is expected to report increased quarterly earnings and revenue. The stock gained 26.8% in 2023.
Positive earnings and revenue growth expectations could lead to a short-term positive impact on JPM's stock price.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
Wells Fargo is projected to report a 71.6% increase in earnings per share and a 3.2% rise in revenue. Shares were up 19% in 2023.
Significant expected growth in earnings and a positive revenue outlook could lead to a short-term uptick in WFC's stock price.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 85