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What You Need to Know About Bank ETFs In Light of Q2 Earnings
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The latest quarterly results from America's major banks are crucial as investors can assess the current economic condition from these very releases. Q2 earnings from six big banks present a kind of inconsistency. Let’s delve a little deeper.
Resurgence in Investment Banking
Across the board, leading banks such as Goldman Sachs (GS), JPMorgan Chase (JPM - Free Report) and others reported robust increases in investment-banking revenues. The revival was backed by improved economic conditions, prompting corporate clients to engage in deal advisory and debt offerings. Executives are cautiously optimistic, viewing these developments as early signs of recovery in capital markets and mergers and acquisitions, per a Wall Street Journal article, as quoted on Yahoo Finance.
Asset and Wealth Management Gains
Buoyed by record-high stock market levels, banks with strong asset-and-wealth-management divisions, including Goldman Sachs and JPMorgan, reported substantial revenue gains. These divisions provided a stable source of fee income amid fluctuations in other banking sectors.
Struggle in Consumer Banking Segment
However, the earnings report also indicated challenges in consumer banking segments. Higher inflation and interest rates exerted pressure on lower-income consumers, resulting in increased credit card balances and payment delinquencies at institutions like JPMorgan, Wells Fargo (WFC - Free Report) , Bank of America (BAC - Free Report) and Citigroup (C - Free Report) . However, banks expect improvements in credit card loan losses as economic conditions improve.
Big Bank Earnings in Focus
High interest rates, the resurgence of the investment banking (IB) business and solid market revenues drove JPMorgan’s second-quarter 2024 adjusted earnings to $4.40 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.19. Net revenues, as reported, were $50.2 billion, up 22% year over year. The top line outpaced the Zacks Consensus Estimate of $45.67 billion.
CitigroupInc.’s second-quarter 2024 net income per share of $1.52 (up 14.3% year over year) surpassed the Zacks Consensus Estimate of $1.40. The top line of $20.14 billion (up 3.6% year over year) surpassed the Zacks Consensus Estimate of $20.03 billion.
Wells Fargo & Company’s second-quarter 2024 earnings per share of $1.33 surpassed the Zacks Consensus Estimate of $1.27. In the prior-year quarter, the company reported earnings per share of $1.25. Quarterly total revenues were $20.7 billion (up 1% year over year), surpassing the Zacks Consensus Estimate of $20.3 billion.
TheGoldman Sachs Group Inc.’s second-quarter 2024 earnings per share of $8.62 surpassed the Zacks Consensus Estimate of $8.52. This compares favorably with $3.08 reported in the year-earlier quarter. Net revenues for the quarter of $12.73 billion increased 16.9% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $12.6 billion.
Morgan Stanley’s second-quarter 2024 earnings of $1.82 per share handily outpaced the Zacks Consensus Estimate of $1.65. The bottom line also compared favorably with $1.24 per share reported in the prior-year quarter. Quarterly net revenues were $15.02 billion, up 12% from the prior-year quarter. The top line beat the Zacks Consensus Estimate of $14.18 billion.
Bank of America’s second-quarter 2024 earnings of 83 cents per share outpaced the Zacks Consensus Estimate of 79 cents. The bottom line compared unfavorably with 88 cents earned in the prior-year quarter. Net revenues were $25.38 billion, which beat the Zacks Consensus Estimate of $25.19 billion. Also, the top line increased marginally from the prior-year quarter.
What Lies Ahead?
Looking ahead, while banks are hopeful about a healthy economic environment, concerns persist related to potential economic disruptions or geopolitical events that could impact future performance. If Trump manages to win the presidential election, bank stocks have higher chances of gain.
All the aforementioned financial 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) . Investors can keep a close track of these ETFs in the near term.
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What You Need to Know About Bank ETFs In Light of Q2 Earnings
The latest quarterly results from America's major banks are crucial as investors can assess the current economic condition from these very releases. Q2 earnings from six big banks present a kind of inconsistency. Let’s delve a little deeper.
Resurgence in Investment Banking
Across the board, leading banks such as Goldman Sachs (GS), JPMorgan Chase (JPM - Free Report) and others reported robust increases in investment-banking revenues. The revival was backed by improved economic conditions, prompting corporate clients to engage in deal advisory and debt offerings. Executives are cautiously optimistic, viewing these developments as early signs of recovery in capital markets and mergers and acquisitions, per a Wall Street Journal article, as quoted on Yahoo Finance.
Asset and Wealth Management Gains
Buoyed by record-high stock market levels, banks with strong asset-and-wealth-management divisions, including Goldman Sachs and JPMorgan, reported substantial revenue gains. These divisions provided a stable source of fee income amid fluctuations in other banking sectors.
Struggle in Consumer Banking Segment
However, the earnings report also indicated challenges in consumer banking segments. Higher inflation and interest rates exerted pressure on lower-income consumers, resulting in increased credit card balances and payment delinquencies at institutions like JPMorgan, Wells Fargo (WFC - Free Report) , Bank of America (BAC - Free Report) and Citigroup (C - Free Report) . However, banks expect improvements in credit card loan losses as economic conditions improve.
Big Bank Earnings in Focus
High interest rates, the resurgence of the investment banking (IB) business and solid market revenues drove JPMorgan’s second-quarter 2024 adjusted earnings to $4.40 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.19. Net revenues, as reported, were $50.2 billion, up 22% year over year. The top line outpaced the Zacks Consensus Estimate of $45.67 billion.
Citigroup Inc.’s second-quarter 2024 net income per share of $1.52 (up 14.3% year over year) surpassed the Zacks Consensus Estimate of $1.40. The top line of $20.14 billion (up 3.6% year over year) surpassed the Zacks Consensus Estimate of $20.03 billion.
Wells Fargo & Company’s second-quarter 2024 earnings per share of $1.33 surpassed the Zacks Consensus Estimate of $1.27. In the prior-year quarter, the company reported earnings per share of $1.25. Quarterly total revenues were $20.7 billion (up 1% year over year), surpassing the Zacks Consensus Estimate of $20.3 billion.
The Goldman Sachs Group Inc.’s second-quarter 2024 earnings per share of $8.62 surpassed the Zacks Consensus Estimate of $8.52. This compares favorably with $3.08 reported in the year-earlier quarter. Net revenues for the quarter of $12.73 billion increased 16.9% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $12.6 billion.
Morgan Stanley’s second-quarter 2024 earnings of $1.82 per share handily outpaced the Zacks Consensus Estimate of $1.65. The bottom line also compared favorably with $1.24 per share reported in the prior-year quarter. Quarterly net revenues were $15.02 billion, up 12% from the prior-year quarter. The top line beat the Zacks Consensus Estimate of $14.18 billion.
Bank of America’s second-quarter 2024 earnings of 83 cents per share outpaced the Zacks Consensus Estimate of 79 cents. The bottom line compared unfavorably with 88 cents earned in the prior-year quarter. Net revenues were $25.38 billion, which beat the Zacks Consensus Estimate of $25.19 billion. Also, the top line increased marginally from the prior-year quarter.
What Lies Ahead?
Looking ahead, while banks are hopeful about a healthy economic environment, concerns persist related to potential economic disruptions or geopolitical events that could impact future performance. If Trump manages to win the presidential election, bank stocks have higher chances of gain.
All the aforementioned financial 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) . Investors can keep a close track of these ETFs in the near term.