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Big Banks Q1 Earnings to Watch on Apr 13: JPM, C, WFC & PNC
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The Q1 earnings season for bank stocks commences tomorrow, with some of the big names reporting their results, before the opening bell. The year 2017 began on a positive note, with improving rate scenario and President Donald Trump’s policy goals.
Banks’ trading revenues are anticipated to continue rising on the back of strength in equity, and fixed income and currencies. Uncertainty related to Trump's policy changes should have led to better trading activities.
Apart from this, banks are likely to witness an increase in investment banking fees attributable to robust M&A activity, as well as increase in debt and equity underwriting. Further, cost control efforts should continue supporting the bottom line.
While a rise in prime lending rates for all major banks due to the Fed’s recent rate hikes should ease some pressure on margins, negligible loan growth during the quarter is likely to partially offset the benefit. Moreover, an increase in provision for credit losses, mainly due to rise in credit card debt, is likely to have an adverse impact on the banks’ financials.
Therefore, per our latest Earnings Preview article, overall earnings for the major banks in first-quarter 2017 are expected to be up just 0.2% year over year.
Nonetheless, there might be a surprise in store for major banking stocks this earnings season. Let’s take a look at the four major banks scheduled to announce their results tomorrow.
JPMorgan Chase & Co. (JPM - Free Report) will kick off the first-quarter earnings season for the banking sector. With a Zacks Rank #3 (Hold) and Earnings ESP of -0.66%, the chances of the company beating the Zacks Consensus Estimate is low this time around.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Slowdown in loan growth is expected to hurt net interest income growth. However, improvements in trading and mortgage revenues, as well as expense reductions are anticipated to support the company’s financials. (Read more: Can JPMorgan Break Out of Recent Sloth on Q1 Earnings?).
Notably, JPMorgan surpassed the Zacks Consensus Estimate in all the trailing four quarters, as shown in the chart below:
For another big bank, Citigroup Inc. (C - Free Report) , we cannot conclusively predict earnings beat in the quarter as higher credit costs are likely to hurt its financials. However, the company is anticipated to witness improvement in trading income and investment banking income, while pressure on margins is expected to somewhat ease. (Read more: Citigroup Q1 Earnings: What's in Store for the Stock?).
Further, this Zacks Rank #3 stock surpassed the Zacks Consensus Estimate in all the trailing four quarters, as reflected in the chart below:
Likewise for Wells Fargo & Company (WFC - Free Report) , we are unable to conclusively predict earnings beat in the to-be-reported quarter. Mounting expenses, disappointing retail banking customer activity, sluggish mortgage business and soft loan growth are some of the factors that are expected to affect the results. Nevertheless, the bank should benefit from easing margin to some extent. (Read more: Wells Fargo to Post Q1 Earnings: What's in Store?).
This Zacks Rank #3 stock posted an average beat of 1% for the trailing four quarters, having beaten the Zacks Consensus Estimate in three of them, as demonstrated in the chart below:
Unlike the above three banks, The PNC Financial Services Group, Inc. (PNC - Free Report) is likely to beat the Zacks Consensus Estimate in the first quarter. Stable net interest income and decline in operating expenses will support earnings. However, a decrease in fee income remains a potential headwind. (Read more: Is a Beat in Store for PNC Financial in Q1 Earnings?)
Check later our full write-up on earnings releases of these stocks.
Want to learn more about major banks’ earnings? Check out our recent video article for additional information:
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Big Banks Q1 Earnings to Watch on Apr 13: JPM, C, WFC & PNC
The Q1 earnings season for bank stocks commences tomorrow, with some of the big names reporting their results, before the opening bell. The year 2017 began on a positive note, with improving rate scenario and President Donald Trump’s policy goals.
Banks’ trading revenues are anticipated to continue rising on the back of strength in equity, and fixed income and currencies. Uncertainty related to Trump's policy changes should have led to better trading activities.
Apart from this, banks are likely to witness an increase in investment banking fees attributable to robust M&A activity, as well as increase in debt and equity underwriting. Further, cost control efforts should continue supporting the bottom line.
While a rise in prime lending rates for all major banks due to the Fed’s recent rate hikes should ease some pressure on margins, negligible loan growth during the quarter is likely to partially offset the benefit. Moreover, an increase in provision for credit losses, mainly due to rise in credit card debt, is likely to have an adverse impact on the banks’ financials.
Therefore, per our latest Earnings Preview article, overall earnings for the major banks in first-quarter 2017 are expected to be up just 0.2% year over year.
Nonetheless, there might be a surprise in store for major banking stocks this earnings season. Let’s take a look at the four major banks scheduled to announce their results tomorrow.
JPMorgan Chase & Co. (JPM - Free Report) will kick off the first-quarter earnings season for the banking sector. With a Zacks Rank #3 (Hold) and Earnings ESP of -0.66%, the chances of the company beating the Zacks Consensus Estimate is low this time around.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Slowdown in loan growth is expected to hurt net interest income growth. However, improvements in trading and mortgage revenues, as well as expense reductions are anticipated to support the company’s financials. (Read more: Can JPMorgan Break Out of Recent Sloth on Q1 Earnings?).
Notably, JPMorgan surpassed the Zacks Consensus Estimate in all the trailing four quarters, as shown in the chart below:
J P Morgan Chase & Co Price and EPS Surprise
J P Morgan Chase & Co Price and EPS Surprise | J P Morgan Chase & Co Quote
For another big bank, Citigroup Inc. (C - Free Report) , we cannot conclusively predict earnings beat in the quarter as higher credit costs are likely to hurt its financials. However, the company is anticipated to witness improvement in trading income and investment banking income, while pressure on margins is expected to somewhat ease. (Read more: Citigroup Q1 Earnings: What's in Store for the Stock?).
Further, this Zacks Rank #3 stock surpassed the Zacks Consensus Estimate in all the trailing four quarters, as reflected in the chart below:
Citigroup Inc. Price and EPS Surprise
Citigroup Inc. Price and EPS Surprise | Citigroup Inc. Quote
Likewise for Wells Fargo & Company (WFC - Free Report) , we are unable to conclusively predict earnings beat in the to-be-reported quarter. Mounting expenses, disappointing retail banking customer activity, sluggish mortgage business and soft loan growth are some of the factors that are expected to affect the results. Nevertheless, the bank should benefit from easing margin to some extent. (Read more: Wells Fargo to Post Q1 Earnings: What's in Store?).
This Zacks Rank #3 stock posted an average beat of 1% for the trailing four quarters, having beaten the Zacks Consensus Estimate in three of them, as demonstrated in the chart below:
Wells Fargo & Company Price and EPS Surprise
Wells Fargo & Company Price and EPS Surprise | Wells Fargo & Company Quote
Unlike the above three banks, The PNC Financial Services Group, Inc. (PNC - Free Report) is likely to beat the Zacks Consensus Estimate in the first quarter. Stable net interest income and decline in operating expenses will support earnings. However, a decrease in fee income remains a potential headwind. (Read more: Is a Beat in Store for PNC Financial in Q1 Earnings?)
PNC Financial posted an average beat of 2.7% for the trailing four quarters, having beaten the Zacks Consensus Estimate in three of them. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PNC Financial Services Group, Inc. (The) Price and EPS Surprise
PNC Financial Services Group, Inc. (The) Price and EPS Surprise | PNC Financial Services Group, Inc. (The) Quote
Check later our full write-up on earnings releases of these stocks.
Want to learn more about major banks’ earnings? Check out our recent video article for additional information:
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>