Major US banks JPMorgan, Goldman Sachs and Wells Fargo reported better-than-expected 1Q2021 results amid recovery in the US economy thanks to government stimulus packages and massive COVID-19 vaccinations.
US banks reported their first three months of 2021 today before trading opened, with stocks responding as follows (as of this writing): JPMorgan Chase (JPM) is down 0.7%, Goldman Sachs (GS) is up 1.7%, and Wells Fargo (WFC) shares were not significantly higher.
In the chart below, you can see that JPMorgan (blue line on the chart) and Goldman Sachs (orange line) have fully recovered their 2020 losses and significantly outperformed early 2020.
Wells Fargo shares have largely recovered from the collapse in March when the US COVID-19 pandemic first hit, but has yet to return to its price levels at the start of last year.
JPMorgan Chase Report
JPMorgan Chase, the largest US bank by assets, reported a jump in earnings in the past quarter due to the release of loan reserves. This year, the Fed has lowered capital requirements for banks that have successfully passed its stress tests.
JPMorgan’s earnings for the first quarter of 2021 jumped sharply to $ 4.50 per share, up from $ 3.07 in the previous quarter and $ 0.78 in the first quarter of last year, well above analysts’ forecast of $ 3.09 earnings per share.
The bank said, excluding the benefit from the issue of reserves and other one-off items, JPMorgan’s first-quarter earnings were $ 3.31 per share.
For the entire first quarter, the bank received $ 14.3 billion in net profit, which is $ 11.4 billion more than a year earlier
Total quarterly revenues for JPMorgan rose 14% (yoy) to $ 32.3 billion, which is also above analysts’ forecasts of $ 30.52 billion. JPMorgan Chase’s quarterly revenues and earnings statistics for the last 2 years are available here.
The strongest growth in JPMorgan’s earnings and profits came from investment banking fees and earnings from stock market trading.
At the same time, gene. JPMorgan director Jamie Dimon noted that consumer spending has returned to “pre-pandemic levels”, increasing 14% compared to the first quarter of 2019, but demand for loans “remains problematic” even with a rebound in spending.
JPMorgan Chase is up 21.26% since early 2021 and nearly 57% in the past 12 months.
Goldman Sachs Report
The first quarter of 2021 was a record in revenue and earnings for Goldman Sachs, significantly surpassing Wall Street estimates thanks to strong growth in equity underwriting and investment banking earnings.
Goldman Sachs reported earnings per share of $ 18.60, up 498% from a year ago and $ 8.38 above the analyst average of $ 10.22.
The bank’s total quarterly revenue grew 128% to $ 17.7 billion, also well above market expectations of $ 12.6 billion. Goldman Sachs quarterly revenue and earnings statistics for the last 2 years are available here.
At Global Markets, Goldman Sachs traders increased revenues by 47% from a year earlier to $ 7.58 billion. Thanks to the strength of its investment arm, Goldman Sachs has been in a better position during the pandemic than more consumer-focused banks as the latter faced a drop in earnings due to zero Fed rates and an outflow of capital to reserves to cover potential loan defaults. As a result, banks such as Wells Fargo posted their first quarterly losses since the previous financial crisis.
Goldman Sachs shares are up 24.26% since early 2021 and nearly 83% in the past 12 months.
Wells Fargo Report
Commenting on Wells Fargo’s Q1 2021 report, Bank CEO Charlie Scharf said: “Our quarterly results, which included a $ 1.6 billion cut in the provision for pre-tax credit losses, reflected an improved US economy, continued focus on our strategic priorities. and ongoing support for our customers.
Write-offs are at historic lows and we are making changes to improve our operations and efficiency, but low interest rates and moderate demand for loans continued to hamper us this quarter. ”
However, Wells Fargo reported a 10% rise in earnings per share to $ 1.05, $ 0.35 more than analysts’ estimates of $ 0.70.
The bank’s revenues rose 2% year-over-year to $ 18.06 billion and also beat Wall Street’s forecasts of $ 17.5 billion. Wells Fargo’s quarterly earnings and earnings statistics for the last 2 years are available here.
Of the six largest US banks, Wells Fargo has the weakest investment banking divisions, which have seen strong growth in other banks in recent months thanks to a surge in IPOs and unprecedented Fed support.
Last year, Wells Fargo was the only bank of the six largest US lenders to be forced to cut its dividend following the Federal Reserve’s annual stress test.
US banks will continue to report their finances this week, with Bank of America (BAC) and Citigroup (C) reporting quarterly results on Thursday, Morgan Stanley (MS) on Friday.