Banks reported a rise in trading income as heightened volatility amid the U.S. Presidential elections led to a significant rise in client activity. Also, mortgage banking fees recorded an impressive growth. But investment banking fees have not shown any improvement so far.
Further, the improving economy spurred demand for loans, leading to an increase in interest income. Moreover, as energy sector concerns eased, provision for credit losses witnessed a decline. Also, operating expenses recorded a downward trend on the back of continued cost saving initiatives.
Nonetheless, the reaction of bank stocks has not been in line with the results. This perhaps reflects investors’ discontent with the outlook provided by the banks.
Important Earnings of the Week
1. Driven by impressive trading revenues, JPMorgan Chase & Co.’s (JPM) fourth-quarter 2016 earnings of $1.71 per share easily surpassed the Zacks Consensus Estimate of $1.42. Also, a modest rise in mortgage banking fees and investment banking income drove the results. Further, higher net interest income, perhaps attributable to the rise in loan, supported the top line. (Read more)
2. Rise in trading revenues as well as mortgage banking fees drove Bank of America Corporation’s (BAC) fourth-quarter 2016 earnings of 40 cents per share, which surpassed the Zacks Consensus Estimate of 38 cents. Also, provision for credit losses recorded a fall as the energy sector concerns seem to be over. However, as expected, investment banking fees declined due to lower advisory fees and equity underwriting fees. (Read more)
3. Driven by interest income, Wells Fargo & Company’s (WFC) fourth-quarter 2016 adjusted earnings of $1.03 per share outpaced the Zacks Consensus Estimate by 3 cents. The company witnessed organic growth aided by strong loans and deposit balances, along with elevated interest income. However, higher expenses and lower non-interest income were a concern. (Read more)
