Bank stocks slip as investment banking revenues decline; JPM’s Dimon warns of headwinds

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The fourth quarter earnings season officially kicked off today, with the big four banks reporting their fourth quarter 2022 results.

JP Morgan (NYSE: JPM) reported better-than-expected earnings, but weaker investment bank earnings and management comments left the stock still trading about 2.5% lower before the market on Friday. The banking giant reported fourth-quarter EPS of $3.57 on earnings of $34.5 billion and on earnings of $341.7 billion he beat analyst consensus for his EPS of $3.11.

Investment Banking revenues of $1.39 billion were down 57% year-on-year, a big miss from the consensus $1.66 billion. JPM’s business units – FICC Sales & Trading, Equity Sales & Trading, and CIB Markets – all missed analyst revenue targets. Managed net interest income was $20.31B, beating the estimate of $18.79B.

CEO Jamie Dimon said the U.S. economy “remains strong today,” but the world’s largest economy is facing headwinds.

“However, the eventual headwinds from geopolitical tensions, such as the war in Ukraine, fragile energy and food supplies, persistent inflation that is eroding purchasing power and pushing up interest rates, and unprecedented circumstances, The impact is yet to be seen, quantitative tightening,” Dimon said in a press release.

Bank of America (NYSE: BAC) also beat expectations in the fourth quarter, posting fourth-quarter EPS of $0.85 on earnings of $24.666 billion, while analysts said it I was asking for $0.79 EPS. Net interest income (NII) was reported at $14.7 billion, a 29% year-over-year increase, but below Street’s $14.9 billion.

BAC shares are trading down 1.5% after the earnings release.

Trading income excluding DVA (debit valuation adjustment) was $3.72B, easily beating Street’s $3.31B. Wealth and Investment Management business unit revenues were reported at $5.41 billion, falling short of consensus at $5.49 billion. Investment banking fees were down more than 50% to $1.1 billion, as expected.

“We ended the year with a strong record of fourth quarter earnings versus the same period last year in an increasingly slowing economic environment. It has been consistent throughout the year as it has helped us deliver value for our deposit franchise.”

“As we head into 2023, we are confident that we are well positioned to serve our customers, shareholders and the communities we serve.”

Wells Fargo (NYSE: WFC) shares fell nearly 4% after the bank reported weaker-than-expected fourth-quarter earnings of $196.6 billion, compared with $199.9 billion for Street. bottom. Adjusted EPS was $1.37, beating his consensus $1.27. Net interest income (NII) jumped 45% to $13.43 billion for him, surpassing $129.9 billion.

Equities were hit primarily by rising costs, as non-interest expenses of $16.2 billion were up 23% year-over-year and exceeded an estimated $14.81 billion.

“Rising interest rates have supported strong growth in net interest income and credit losses continued to rise slowly, but credit quality remained strong,” Chief Executive Officer Charles Scharf said in a press release. ‘He said.

Senad Karametovich

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