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Market Reaction To Bank Earnings Is Mixed, JPMorgan Analysts Project Further Decline In Net Interest Income

As the U.S. financial sector grapples with recent earnings releases, investor reactions have been mixed.

Some stocks are witnessing declines. Others are posting gains. See below.

Banks Q1 Earnings Reports And Market Reactions, So Far


Company

Ticker

Mkt Cap ($ mn)

Price ($)

Rating

JPMorgan Price Target

End Date

Q1 Earnings Date

EPS

Revenue

Stock Reaction (since earnings) as of April 18, 2:40 PM ET

Citigroup Inc.

C

119,590.80

62.84

N

64

Dec-24

Apr 12

Beat

Beat

-4.46%

Wells Fargo

WFC

206,396.90

57.35

N

59

Dec-24

Apr 12

Beat

Beat

-0.11%

Bank of America

BAC

294,502.20

37.3

OW

39.5

Dec-24

Apr 16

Beat

Beat

2.43%

PNC Financial

PNC

63,173.54

157.54

OW

163.5

Dec-24

Apr 16

Beat

Miss

-0.79%

Citizens Financial Group

CFG

16,343.29

35.04

N

36.5

Dec-24

Apr 17

Beat

Miss

2.76%

U.S. Bancorp

USB

67,352.34

43.23

OW

45

Dec-24

Apr 17

Beat

Miss

-3%

Fifth Third Bancorp

FITB

24,506.88

35.98

N

37.5

Dec-24

Apr 19

Regions Financial

RF

18,812.64

20.36

N

21

Dec-24

Apr 19

Truist Financial Corp

TFC

50,535.52

37.89

N

39.5

Dec-24

Apr 22

US Banks Q1 2024 Earnings

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Citigroup Inc (NYSE:C) and Wells Fargo (NYSE:WFC) reported earnings on April 12. Both firms beat EPS and revenue estimates.

Citi stock is down 4.46% while Wells Fargo’s stock is down 0.11% since April 12.

Bank of America (NYSE:BAC) reported a beat on both metrics; PNC Financial (NYSE:PNC) fell short of consensus estimates on revenue. BAC stock is up 2.43% since then, but PNC is down 0.79%.

Then there’s Citizens Financial Group (NYSE:CFG). The firm reported a beat on EPS but a miss on revenue on Wednesday. Citizens stock was trading up 2.76% during day trading on Wednesday by 2.40 PM ET.

U.S. Bancorp (NYSE:USB) reported a beat on EPS, but a miss on revenue. The firm’s stock was trading down by more than 3.3% at last check Wednesday, trading at $39.62 a share.

Macroeconomic Concerns

With the Fed delaying the rate cut decision, market sentiment towards banks and bank stocks appears muted, despite earnings beats.

The SPDR Financial Select Sector ETF (NYSE:XLF) has experienced a 1.17% decline since then (April 12), reflecting the market’s subdued sentiment.

Regional banks, represented by the SPDR S&P Regional Banking ETF (NYSE:KRE), have also dipped by 1.66% over these past 5 days.

Upcoming earnings reports include:

  • Fifth Third Bancorp (NYSE:FITB), Friday, April 19.

  • Regions Financial (NYSE:RF) also April 19

  • Truist Financial Corp (NYSE:TFC), Monday, April 22

What Lies Ahead For Banks In 2024?

JPMorgan Chase anticipates a challenging quarter for banks. The firm’s analysts project a further decline in net interest income by approximately 3.6%; weak loan performance is expected to decrease by 0.8% quarter-over-quarter.

View more earnings on WFC

Moving forward, banks’ ability to reduce deposit costs in response to potential rate cuts by the Federal Reserve, will be critical, notes JPMorgan, drawing attention to the ongoing competition posed by U.S. money market mutual funds.

Particularly during periods of rate adjustments, these tend to influence banks’ deposit pricing strategies.

Moreover, JPMorgan notes that retail segment deposits are expected to exhibit lower betas to rate cuts, with retail deposits comprising a significant portion of banks’ total deposits.

Notably, Citizens, Regions, Wells Fargo, and Truist have relatively higher shares of retail deposits, albeit with nuances in their compositions.

Citi stands out with a smaller proportion of U.S. retail deposits but holds a larger volume of overseas deposits, characterized by lower deposit betas compared to the US market.

More on this aspect, covered here: Big Banks To Report Q1 Earnings: Analyst Prefers Bank Of America, ‘Citi Likely To Lag’

For investors, the key lies in selective stock picking, favoring well-capitalized banks with robust reserves and reduced exposure to commercial real estate. The upcoming reports will provide valuable cues for investors navigating the financial landscape in the months ahead.

Read Next: Financial Stocks Fall After Earnings, Major Banks Notch 4-Day Losing Streak: Regional Banks Hit Lowest Level Since Late 2023

Image: Midjourney

Latest Ratings for WFC

Jan 2022

Raymond James

Maintains

Outperform

Jan 2022

Piper Sandler

Upgrades

Neutral

Overweight

Jan 2022

JP Morgan

Maintains

Neutral

View More Analyst Ratings for WFC

View the Latest Analyst Ratings

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This article Market Reaction To Bank Earnings Is Mixed, JPMorgan Analysts Project Further Decline In Net Interest Income originally appeared on Benzinga.com

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