Earnings season is off and running. We saw the first big bank earnings on Friday, and while they were not awful, the stock market did not think that much of them. JP Morgan (JPM). Wells Fargo (WFC) and JP Morgan were all three down despite a pretty strong rally in the braider markets.
JPMorgan (JPM) reported a strong quarterly net income of $6.12 per share, or $13.1 billion. The return on equity (ROE) was a healthy 23%, and the return on tangible common equity (ROTCE) was 28%. Despite the strong reports, CEO Jamie Dimon highlighted caution due to geopolitical risks, inflationary pressures, and the impact of quantitative tightening.
Credit continues to be a concern and focus for the bank as credit card charge-offs climbed again this quarter. The doom-and-gloom crown will crow about the $credit card charge-offs, but it is worth noting that the total dividend payments and buybacks alone were four times the charge-off credit card accounts in the quarter.
Dimon emphasized the firm's strong capital position, with a CET1 ratio of 15.3%, and announced plans for increased dividends, reflecting JPMorgan's strong financial health and commitment to driving economic growth by extending significant credit and capital YTD.
Unfortunately, Dimon was not on the call, so there was no opportunity for one of his outstanding off-the-rails commentaries this quarter.
Wells Fargo's second-quarter profit decreased, missing analysts' estimates for interest income due to higher deposit costs amid intense competition. This caused shares to drop over 6%. Net interest income fell 9% to $11.92 billion, below the expected $12.12 billion. The bank forecasts a 7-9% decline in NII for the year.
Despite these challenges, investment banking fees surged 38% to $430 million, helping Wells Fargo beat profit expectations. Earnings per share were $1.33 compared to the expected $1.29.
The market did not ...
