Reality is beginning to settle in for three of the largest U.S. banks, as evidenced by their second-quarter results. JPMorgan Chase, Citigroup, and Wells Fargo reported earnings results on Friday, showing some positive gains but also highlighting potential challenges ahead.
All three banks saw growth in profits and revenues compared to last quarter and last year, with results meeting or exceeding Wall Street estimates. Despite this, their stocks fell in morning trading. Net interest income (NII), a key measure of how much banks earn from loans, presented some concerns as Wells Fargo and JPMorgan reported less favorable results.
Citigroup’s earnings indicated early success for CEO Jane Fraser’s corporate overhaul. The bank reported a 2% year-over-year decline in operating expenses for the second quarter, thanks to simplification efforts. Revenue was up 4% to $20.1 billion, and net income reached $3.2 billion, or $1.52 per share, beating analysts’ expectations.
Citi’s shares, however, dropped more than 3% in morning trading after initially rising. Warren Kornfeld, senior vice president at Moody’s Ratings Financial Institutions Group, pointed out that while progress has been made, Citi still faces challenges in expanding its market share and reducing expenses.
Wells Fargo saw its stock drop over 7% after reporting a 9% decrease in NII, falling short of analysts’ expectations. Although revenue rose slightly to $20.7 billion, net income slightly declined to $4.91 billion, or $1.33 per share. Megan Fox of Moody’s noted ongoing difficulties with net interest income and operating expenses.
JPMorgan reported mixed results, with its stock falling 2% due to NII of $22.9 billion, which was below expectations. Despite this, JPMorgan posted record quarterly profit of $18.1 billion, or $6.12 per share, surpassing estimates. Revenue increased 22% year-over-year to $50.2 billion, driven by a rise in investment banking fees and gains from new Visa shares.
While the banks reported strong profits, the results also showed potential challenges, particularly around net interest income and expenses, as they navigate the evolving economic landscape.