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Diving into Q2 Earnings Season: JPM, WFC, C and PNC

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Friday, July 13, 2018

The long-awaited (unofficial) start to Q2 earnings season is finally upon us with this morning’s influx of major Wall Street banks reporting results, including JPMorgan Chase (JPM - Free Report) , Citigroup (C - Free Report) and Wells Fargo (WFC - Free Report) . These arrive as roughly 5% of the S&P 500 have already reported quarterly results, mostly those with fiscal quarters ending in May, not June.

Before we splash into that pool, however, we also see a new read on Import Prices for June: the Import Price Index slipped 0.4% last month, following a 0.9% jump in May and well off the +0.6% analysts were expecting. This is the largest monthly drop since February of this year. These month-by-month figures do have a bent toward more volatility that smooths out year over year, however. To wit, we still see Import Prices up 4.3% from June 2017.

U.S. Exports rose 0.3% in June, halving the 0.6% gains from the previous month. We are not prepared, at this hour, to make any speculation regarding Import/Export numbers in the months ahead, especially with the day-to-day static of trade tariff turmoil potentially making analysts weary of future results in these metrics. What we do know is that, despite somewhat of a disappointment in the June numbers, U.S. import and export business has proven strong over the past year.

Speaking of strong, JPMorgan once again outperformed expectations on both top and bottom lines for its Q2 earnings report this morning: earnings of $2.29 per share topped estimates of $2.22, while revenues reaching $28.39 billion surpassed both the $27.66 billion in the Zacks consensus and the year-ago figure of $26.7 billion.

Investment banking, fixed income and equity market revenues all posted notable gains year over year — the latter which posted an impressive 24% gain. For more on JPM’s earnings, click here.

Citigroup also outpaced Zacks consensus estimates for both earnings and revenues in its Q2 report — $1.62 versus $1.54 per share on the bottom line, and $18.5 billion versus $18.4 billion on the top. This marks at least the fifth straight earnings beat, and is especially impressive compared to year-ago earnings of $1.28 per share.

Revenues and net income rose year over year, whereas fixed income fell 6% from the June 2017 quarter. For more on C’s earnings, click here.

The only real disappointment in big bank earnings this morning has come from Wells Fargo & Co., which posted mixed results in its June quarter: $1.08 per share versus the $1.12 earnings estimate, on $21.6 billion in revenues that eked out the $21.5 billion expected.

While revenues remained generally in-line, average deposits fell 2% year over year, as the company continues to dig out from its reputational issues, costing the bank more money in targeted sales and marketing objectives. For more on WFC’s earnings, click here.

Often overlooked due to the long shadows cast by its larger-cap brethren, PNC Financial (PNC - Free Report) also posted easy beats on its headline earnings and revenues for Q2 2018. The Pittsburgh-based bank reached $2.72 per share on $4.35 billion in quarterly revenues, besting the $2.58 per share and $4.25 billion, respectively.

This is a larger beat that the trailing 4-quarter average of +2.6%, with net margins up year over year. For more on PNC’s earnings click here.

Mark Vickery
Senior Editor

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