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The financial sector, which accounts for around one-fifth of the S&P 500 Index, had a mixed Q4. Three out of six big U.S. banks were able to beat overall. Finance sector earnings are projected to decline 9.2% on 2.7% higher revenues in Q4, per Zacks Earnings Trends issued on Jan 18, 2023.Let’s take a look at the big banks’ earnings which released lately.
Big Bank Earnings in Focus
Higher loan balance, rising rates and solid markets performance drive JPMorgan’s (JPM - Free Report) fourth-quarter 2022 adjusted earnings of $3.56 per share, which surpassed the Zacks Consensus Estimate of $3.11. The results excluded gains from the sale of Visa B shares and net investment securities losses in the Corporate segment. Our estimate for earnings was $2.98 per share. Net revenues, as reported, were $34.5 billion, up 18% year over year. The top line beat the Zacks Consensus Estimate of $34 billion. Our estimate for the metric was $32.1 billion.
Citigroup Inc.’s (C - Free Report) fourth-quarter 2022 earnings per share (excluding divestiture-related impacts) of $1.10 have lagged the Zacks Consensus Estimate of $1.18. The figure declined 44.7% on a year-over-year basis. Our estimate for earnings was $1.09 per share. Revenues, net of interest expenses, moved up 6% year over year to $18 billion in the fourth quarter. The top line outpaced the Zacks Consensus Estimate of $17.91 billion.
Wells Fargo’s (WFC - Free Report) fourth-quarter 2022 earnings per share of 67 cents outpaced the Zacks Consensus Estimate of 63 cents. Results included several non-recurring items like the $3.3 billion or 70 cents per share of operating losses related to “litigation, regulatory, and customer remediation matters.” Quarterly total revenues came in at $19.66 billion, missing the Zacks Consensus Estimate of $19.89 billion. Also, the top line fell 6% from the year-ago quarter.
The Goldman Sachs Group, Inc.’s (GS - Free Report) fourth-quarter 2022 earnings per share of $3.32 missed the Zacks Consensus Estimate of $5.25 by a considerable margin. Also, the bottom line fell significantly from $10.81 in the year-earlier quarter. Our estimate for earnings was $4.80 per share. Net revenues of $10.59 billion fell 16% from the year-ago quarter. Nonetheless, the top line beat the Zacks Consensus Estimate of $10.52 billion. Our estimate for the metric was $10.29 billion.
Bank of America’s (BAC - Free Report) fourth-quarter 2022 earnings of 85 cents per share surpassed the Zacks Consensus Estimate of 76 cents. The bottom line compared favorably with 82 cents earned in the prior-year quarter. Our estimate for earnings was 80 cents per share. Quarterly net revenues were $24.5 billion, which marginally beat the Zacks Consensus Estimate of $24.1 billion. The top line grew 11.2% from the prior-year quarter. Our estimate for the metric was $24.19 billion.
Morgan Stanley (MS - Free Report) came out with quarterly earnings of $1.31 per share, beating the Zacks Consensus Estimate of $1.25 per share. This compares to earnings of $2.08 per share a year ago. These figures are adjusted for non-recurring items. Morgan Stanley posted revenues of $12.75 billion for the quarter ended December 2022, surpassing the Zacks Consensus Estimate by 4.84%. This compares to year-ago revenues of $14.52 billion.
ETF Impact
All the aforementioned companies have considerable exposure in funds like iShares U.S. Financial Services ETF (IYG - Free Report) , Invesco KBW Bank (KBWB - Free Report) , Financial Select Sector SPDR (XLF - Free Report) , U.S. Broker-Dealers Index Fund (IAI - Free Report) and Vanguard Financials ETF (VFH - Free Report) .
IYG, KBWB, XLF, IAI and VFH have lost 2.7%, 3.2%, 3.0%, 2.3% and 2.3%, respectively in the past week. Though financial earnings did not spark hopes among investors, decent valuation of the sector and chances of higher net interest rate margins in the days to come, may prove to be helpful for the funds.
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Financial ETFs Down on Mixed Earnings
The financial sector, which accounts for around one-fifth of the S&P 500 Index, had a mixed Q4. Three out of six big U.S. banks were able to beat overall. Finance sector earnings are projected to decline 9.2% on 2.7% higher revenues in Q4, per Zacks Earnings Trends issued on Jan 18, 2023.Let’s take a look at the big banks’ earnings which released lately.
Big Bank Earnings in Focus
Higher loan balance, rising rates and solid markets performance drive JPMorgan’s (JPM - Free Report) fourth-quarter 2022 adjusted earnings of $3.56 per share, which surpassed the Zacks Consensus Estimate of $3.11. The results excluded gains from the sale of Visa B shares and net investment securities losses in the Corporate segment. Our estimate for earnings was $2.98 per share. Net revenues, as reported, were $34.5 billion, up 18% year over year. The top line beat the Zacks Consensus Estimate of $34 billion. Our estimate for the metric was $32.1 billion.
Citigroup Inc.’s (C - Free Report) fourth-quarter 2022 earnings per share (excluding divestiture-related impacts) of $1.10 have lagged the Zacks Consensus Estimate of $1.18. The figure declined 44.7% on a year-over-year basis. Our estimate for earnings was $1.09 per share. Revenues, net of interest expenses, moved up 6% year over year to $18 billion in the fourth quarter. The top line outpaced the Zacks Consensus Estimate of $17.91 billion.
Wells Fargo’s (WFC - Free Report) fourth-quarter 2022 earnings per share of 67 cents outpaced the Zacks Consensus Estimate of 63 cents. Results included several non-recurring items like the $3.3 billion or 70 cents per share of operating losses related to “litigation, regulatory, and customer remediation matters.” Quarterly total revenues came in at $19.66 billion, missing the Zacks Consensus Estimate of $19.89 billion. Also, the top line fell 6% from the year-ago quarter.
The Goldman Sachs Group, Inc.’s (GS - Free Report) fourth-quarter 2022 earnings per share of $3.32 missed the Zacks Consensus Estimate of $5.25 by a considerable margin. Also, the bottom line fell significantly from $10.81 in the year-earlier quarter. Our estimate for earnings was $4.80 per share. Net revenues of $10.59 billion fell 16% from the year-ago quarter. Nonetheless, the top line beat the Zacks Consensus Estimate of $10.52 billion. Our estimate for the metric was $10.29 billion.
Bank of America’s (BAC - Free Report) fourth-quarter 2022 earnings of 85 cents per share surpassed the Zacks Consensus Estimate of 76 cents. The bottom line compared favorably with 82 cents earned in the prior-year quarter. Our estimate for earnings was 80 cents per share. Quarterly net revenues were $24.5 billion, which marginally beat the Zacks Consensus Estimate of $24.1 billion. The top line grew 11.2% from the prior-year quarter. Our estimate for the metric was $24.19 billion.
Morgan Stanley (MS - Free Report) came out with quarterly earnings of $1.31 per share, beating the Zacks Consensus Estimate of $1.25 per share. This compares to earnings of $2.08 per share a year ago. These figures are adjusted for non-recurring items. Morgan Stanley posted revenues of $12.75 billion for the quarter ended December 2022, surpassing the Zacks Consensus Estimate by 4.84%. This compares to year-ago revenues of $14.52 billion.
ETF Impact
All the aforementioned companies have considerable exposure in funds like iShares U.S. Financial Services ETF (IYG - Free Report) , Invesco KBW Bank (KBWB - Free Report) , Financial Select Sector SPDR (XLF - Free Report) , U.S. Broker-Dealers Index Fund (IAI - Free Report) and Vanguard Financials ETF (VFH - Free Report) .
IYG, KBWB, XLF, IAI and VFH have lost 2.7%, 3.2%, 3.0%, 2.3% and 2.3%, respectively in the past week. Though financial earnings did not spark hopes among investors, decent valuation of the sector and chances of higher net interest rate margins in the days to come, may prove to be helpful for the funds.