The earnings season for the 2018 second quarter began Friday as big banks such as JPMorgan Chase and Citigroup beat expectations, while Wells Fargo came up short. However, each of the three stocks did poorly as the overall numbers did little to inspire Wall Street.
Analysts expected strong numbers and due to the growth in the economy supporting lending while volatile markets would support trade. However, most were correct with predictions that bank stocks would not reverse their weakness that has persisted since late February.
One market research company said the earnings had been mixed saying that looking at all the many components one can see that not everything has been working. The analyst added that the loan business for JPMorgan looked good, but not for Wells Fargo, while Citi fell somewhere between the two.
Trade tensions between Washington and China as well as other major partners surfaced during conference call for earnings, but many called it too early for that to matter.
CEO at JPMorgan, Jamie Dimon told the media that thus far the escalating trade dispute has affected the psyches more than economics. CFO at Citigroup John Gerspach said trade tensions were weighing on the overall market, but not at the bank.
However, one Wall Street analysts said that the trade problems were probably giving big corporate clients at the bank whiplash, which means that for some companies there is quite a big economic outcome taking place due to the ongoing rift between the two countries.
JPMorgan’s Dimon played down the worries over yield curve flattening, as rates for the short term rise with the well-telegraphed increases in interest rates by the Federal Reserve, while the curve falls on the long-end, typically considered a precursor to a downturn in the economy or even a recession.
JPMorgan posted a net profit of just over $8.3 billion equal to $2.29 per share, which beat analyst expectations of $2.22 per share.
Citigroup posted a $4.49 billion net profit equal to $1.63 per share which was up from the same period one year ago of $3.87 billion equal to $1.56 per share. Revenue reached $18.5 billion a rise of 2%. Analysts were expected $18.5 billion in revenue and $1.56 per share.
Wells Fargo posted a $4.79 billion net income equal to 98 cents per share, which was 12% lower than the same period one year ago. Analysts were expecting $1.12 per share in earnings. Total revenue dropped to $21.55 billion which was a 2% fall missing expectations of 21.68 billion