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Bank Stock Roundup: Q3 Earnings Season Commences, JPMorgan & Citi Beat Estimates

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Over the last five trading days, performance of banking stocks was bearish, with third-quarter earnings results primarily weighing on the stocks. Though the banks were able to surpass earnings estimates, the overall financial performance remained muted.

Weakness in trading and investment banking as well as rise in credit costs hindered significant earnings improvement. Additionally, dismal mortgage banking hurt revenue growth.

On the other hand, higher interest rates and loan growth along with prudent cost management supported banks’ profitability to some extent.



(Read: Bank Stock Roundup for the week ending Oct 6, 2017)

Important Earnings of the Week

1. Amid an expected trading slump and lower underwriting fees, rising rates and loan growth drove JPMorgan Chase & Co.’s (JPM - Free Report) third-quarter 2017 earnings, which easily outpaced the Zacks Consensus Estimate. Further, higher advisory fees and a slight fall in operating expenses acted as tailwinds. On the other hand, a decline in mortgage banking income was a headwind. (Read more: JPMorgan Q3 Earnings Beat Despite Trading Weakness)

2. Despite weak fixed income market revenues, Citigroup Inc. (C - Free Report) delivered a positive earnings surprise in third-quarter 2017 on prudent expense management. Overall top-line strength was reflected, driven by higher banking and consumer banking revenues. Moreover, expenses declined on efficiency savings by the bank. (Read more: Citigroup Q3 Earnings Beat on Low Costs & High Revenues)

3. Bank of the Ozarks, Inc.’s third-quarter 2017 earnings surpassed the Zacks Consensus Estimate. Higher net interest income and non-interest income acted as tailwinds. However, higher expenses and an increase in provision for loan and lease losses were the undermining factors. (Read more: Bank of the Ozarks Q3 Earnings Beat, Stock Down 2.7%).

Price Performance

Here is how the seven major stocks performed:
 

Company

Last Week

6 month

JPM

-1.0%

13.0%

BAC

-2.9%

13.3%

WFC

-0.7%

5.4%

C

-4.3%

24.6%

COF

-2.8%

3.6%

USB

-0.4%

7.7%

PNC

-0.3%

17.3%



In the last five trading sessions, Citigroup and Bank of America Corp. (BAC - Free Report) were the worst performers, with their shares declining 4.3% and 2.9%, respectively. Furthermore, Capital One Financial Corp. (COF - Free Report) moved down 2.8%.

Citigroup and The PNC Financial Services Group, Inc. (PNC - Free Report) were the best performers over the last six months, with their shares jumping 24.6% and 17.3%, respectively. Also, shares of BofA and JPMorgan increased 13.3% and 13%, respectively.

What’s Next?

Over the next five trading days, banks earnings releases will continue to be in focus. Major banks scheduled to report are Comerica Incorporated (CMA - Free Report) on Oct 17 and U.S. Bancorp (USB - Free Report) on Oct 18 while KeyCorp (KEY - Free Report) , The Bank of New York Mellon Corporation (BK - Free Report) and BB&T Corporation are slated to announce results on Oct 19.

So, performance of the banking stocks will majorly depend of their third-quarter results and guidance for the upcoming quarters.

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