By Senad Karaahmetovic
The Q4 earnings season has officially kicked off today with the Big Four banks reporting on their performance in the last quarter of 2022.
JPMorgan (NYSE:JPM) reported better-than-expected earnings but shares still trade about 2.5% lower in pre-market Friday on soft investment banking revenue and management's comments. The banking giant reported a Q4 EPS of $3.57 on revenue of $34.5 billion, beating the analyst consensus for EPS of $3.11 on revenue of $34.17B.
Investment banking revenue fell 57% year-over-year to $1.39B, a large miss compared to the $1.66B consensus. JPM's business units - namely FICC sales & trading, Equities sales & trading, and CIB Markets - all missed analyst targets for revenue. Managed net interest income was $20.31B, ahead of the $18.79B estimate.
CEO Jamie Dimon said that while the U.S. economy "currently remains strong," he sees headwinds facing the world’s largest economy.
"However, we still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher, and the unprecedented quantitative tightening," Dimon said in a press release.
Bank of America (NYSE:BAC) also topped expectations for the fourth quarter with Q4 EPS coming in at $0.85 on revenue of $24.5B while analysts were looking for EPS of $0.79 on revenue of $24.32B. Net interest income (NII) was reported at $14.7B, representing an increase of 29% YoY but below the Street at $14.9B.
BAC shares are trading 1.5% lower, following the earnings report.
Trading revenue excluding DVA (debit valuation adjustment) came in at $3.72B, easily ahead of the Street at $3.31B. Revenue for the wealth & investment management business unit was reported at $5.41B, missing the $5.49B consensus. Investment banking fees fell by over 50% to $1.1B, in line with expectations.
"We ended the year on a strong note growing earnings year over year in the 4th quarter in an increasingly slowing economic environment. The themes in the quarter have been consistent all year as organic growth and rates helped deliver the value of our deposit franchise," said CEO Brian Moynihan.
"We believe we are well positioned as we begin 2023 to deliver for our clients, shareholders and the communities we serve."
Wells Fargo (NYSE:WFC) shares are down almost 4% after the bank reported weaker-than-expected Q4 revenue of $19.66B vs Street was at $19.99B. Adjusted EPS came in at $1.37, beating the $1.27 consensus. Net interest income (NII) soared 45% to $13.43B, ahead of the $12.99B.
Shares were mostly hit by soaring expenses as the bank reported its non-interest expenses stood at $16.20B, up 23% YoY and above the estimate of $14.81B.
"Rising interest rates drove strong net interest income growth, credit losses have continued to increase slowly but credit quality remained strong," CEO Charles Scharf said in a press release.
Finally, Citigroup (NYSE:C) reported Q4 EPS of $1.16, missing the analyst estimate of $1.20. Revenue for the quarter came in at $18B versus the consensus estimate of $17.91B.
Citi CEO Jane Fraser said, "One of our major goals in 2022 was to put in place a strategic plan designed to create long-term value for our shareholders and I am pleased with the significant progress we have already made in terms of our Transformation, simplification and strengthening our five interconnected businesses, some of which delivered excellent results this quarter."
Citi shares are down 2.5% following the Q4 earnings report.