Best Opening For Earnings Seasons? Major Banks All Beat Estimates!
A research report led by strategist Savita Subramanian on Monday stated that among the 30 companies in the S&P 500 index that have already reported their earnings, 90% of them have exceeded earnings per share expectations, and 73% have surpassed revenue expectations.
This is the biggest positive surprise in the first week of the reporting period since at least 2012, largely due to impressive earnings from $JPMorgan Chase(JPM)$, $Citigroup(C)$ , and $Wells Fargo(WFC)$.
Driven by the impressive financial data, JPMorgan Chase's stock price surged by 7.55% on the same day, marking the largest single-day gain since November 2020.
1. Major Banks Released Stellar Earnings After Bank Run
On last Friday, the three major U.S. banks $JPMorgan Chase(JPM)$ , $Wells Fargo(WFC)$ , and $Citigroup(C)$ all reported stellar earnings, all achieving double beat performance in revenue and earnings per share.
The earnings reports of the three banks confirm that the storm brought about by the bankruptcy of $SVB Financial Group(SIVBQ)$ is a crisis for small banks and an opportunity for big banks: the inflow of customer funds is higher.
2. Mixed Earnings From Regional Banks
1) $Charles Schwab(SCHW)$ posted better-than-expected 1Q results
In the first quarter, Schwab's deposits decreased by 30%, in line with market expectations. However, its profit increased by 12% compared to the same period last year, exceeding Wall Street's expectations.
Clients continued to allocate funds to Schwab investment products. The core net asset inflows totaled $132 billion, with March alone surpassing $53 billion, the second-highest in history for the month.
2) Unpexpected Misses in $State(STT)$ 's Earnings as Assets Plummet
State Street, the asset management giant with nearly $3.5 trillion in assets under management, experienced a sudden decline in its stock price, with shares plunging as much as 18% intraday and closing down over 9%, marking the largest drop in over three years.
Earlier, State Street had reported that clients were withdrawing funds from its investment products, and this trend of outflows may not have ended yet.
The bank announced on Monday that clients had net withdrawals of $26 billion from its investment products in the first quarter, a figure that caught analysts off guard, as they had expected net inflows of $8 billion for the quarter.
3. More Bank Earnings This Week! How Do Analysts Expect?
Major banks including $Bank of America(BAC)$ , $Goldman Sachs(GS)$ and $Morgan Stanley(MS)$ will release their earnings this week
Analysts from Bank of America has stated that
if further evidence suggests that the crisis in March is short-term, the current expectation of $200 per share for 2023 earnings may be too low, which is also below the consensus forecast of $220 per share.
However, Bank of America still predicts that listed companies will revise their expectations downward, as companies are all lowering their full-year profit outlook. The bank's strategists warned last week that downward revisions in expectations may accelerate in the coming quarters.
How do you view banks’ earnings results?
Do you think bank run is an opportunity for big banks?
Are you bullish on other banks’ results?
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interest rates will be high for a while. despite what the banks say, it's all falling nicely in place for them.
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Do you think bank run is an opportunity for big banks?
Yes, the bank's financial stability is one of the top priorities! Hence it is natural that most people would park their savings in bigger banks. Hence, creating opportunities for big banks.
Are you bullish on other banks’ results?
Although higher interest rates lead to higher profit, it also increases the cost of customer deposits. There's also fierce competition for investment segment. Hence, the growth may start to slow down. I remain neutral for the other banks.
The bank earnings results are encouraging. This is mainly due to increasing interest rates, which resulted in larger profit for the banks. However, the earnings are also expected to drop when the interest rates normalize.
Do you think bank run is an opportunity for big banks?
Yes, the bank's financial stability is one of the top priorities! Hence it is natural that most people would park their savings in bigger banks. Hence, creating opportunities for big banks.
Are you bullish on other banks’ results?
Although higher interest rates lead to higher profit, it also increases the cost of customer deposits. There's also fierce competition for investment segment. Hence, the growth may start to slow down. I would maintain a neutral stance for the other banks.
the govt has potentially back stopped the bank run. but will give the larger banks more leverage to grow their deposit base.
the banks have been badly beaten so is a sector of interest which may be have greater upside compared to the other sector.