BofA, Citigroup, Morgan Stanley and Wells Fargo: 3Q results for US banks beat market estimates

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SAO PAULO – In the wake of corporate results in the third quarter in the United States, Bank of America, Citigroup, Morgan Stanley and Wells Fargo presented, on Thursday (14), results above the market’s expectations, in a tone of post- Covid-19.

The numbers benefited, for the most part, from better performance in the asset management, investment advisory and equity trading arms.

Yesterday, JPMorgan debuted the corporate earnings season, also showing better-than-expected data.

The bank earned $3.74 per share for the period, up from $3.00 expected, while revenue also beat Wall Street forecasts.

Net income was $11.7 billion, an increase of $2.2 billion, largely driven by credit reserve releases of $2.1 billion, versus credit reserve releases of $569 million in the same period last year.

The last quarter also included a $566 million income tax benefit related to the completion of the company’s 2020 US federal income tax return.

Jamie Dimon, CEO of JPMorgan, stressed in a note that the quarter was strong despite the negative economic impact of the delta variant of Covid-19 and supply chain disruptions.

Check out the main highlights of this farm below:

Bank of America

For the quarter ended September, Bank of America posted net income of $7.7 billion, up 58% from $4.9 billion a year earlier.

The bank benefited over the period from better-than-expected lending and record investment advisory and asset management fees.

BofA’s revenue totaled US$ 22.8 billion, an increase of around 12% compared to the US$ 20.3 billion presented a year earlier. Earnings per share were US$ 0.85, above the US$ 0.51 presented in the third quarter of 2020 and the expectation of analysts consulted by Refinitive, of US$0.71.

“We reported solid results as the economy continued to improve and our businesses regained the organic customer growth momentum we saw before the pandemic,” wrote Brian Moynihan, CEO of BofA, in a statement following the data release.

“Deposit growth was strong and loan balances increased for the second quarter in a row, leading to an improvement in net interest income even as interest rates remained low,” he added.

BofA delivered strong results in the investment banking, wealth management and equity trading businesses. Investment banking revenues grew 23 percent to $2.2 billion, close to record levels, helped by a 65 percent increase in advisory fees to a record $654 million.

The bank’s wealth management division posted a 17% increase in revenue to $5.3 billion, driven by record asset management fees of $3.2 billion.

Wells Fargo

Wells Fargo also posted a jump in third-quarter profit, driven by a release of its credit-loss reserves as the pandemic’s recovery accelerated in 2021.

In the period, revenue totaled US$ 18.83 billion, above the financial market’s estimates of US$ 18.35 billion. Earnings per share were $1.22, also beating estimates of $0.99.

Between the months of July and September, net income totaled US$ 5.1 billion, an increase of 59% compared to the US$ 3.2 billion in the same period last year.

According to the bank, the results were helped by a $1.65 billion reserve release that led to a $1.4 billion benefit after the write-offs.

Citigroup

Also on Thursday, Citigroup released its third-quarter results, which came in better than expected. Net income came in at $4.6 billion, up 48% from $3.1 billion a year earlier.

Total revenue was $17.15 billion, which equates to a profit of $2.15 per share. Wall Street Analysts, Based on Consensus Refinitive, expected earnings per share of $1.65, on revenue of $16.97 billion.

Trading revenues on the fixed-income and equity markets, on the other hand, exceeded estimates and totaled US$ 3.18 billion and US$ 1.23 billion, respectively.

“The pandemic recovery continues to drive corporate and consumer confidence and is creating very active customer engagement, as you can see from our strong results in investment banking and equity markets, both up approximately 40% year over year. We’ve also seen digit growth in the treasury and commerce solutions space as we help our clients reposition their supply chain,” commented Jane Fraser, CEO of Citigroup, in a statement.

Morgan Stanley

Morgan Stanley reported higher-than-expected third-quarter earnings, with its investment banking division closing more deals and generating a record $1.27 billion in advisory.

The bank benefited from strong M&A (M&A) activity and market, with total deals worth $1.52 trillion announced in the period. The number represents a 38% growth compared to the previous year, greater than any quarter on record, according to data from Refinitive.

Revenue from its investment banking unit, which comprises consulting businesses, was $2.85 billion, up from $1.71 billion a year ago.

Net income, in turn, rose to $3.58 billion, or $1.98 per share, from $2.6 billion, or $1.66 per share, a year earlier. The number came in above the $1.68 per share expected by analysts interviewed by Refinitive.

Net income increased to $14.75 billion in the quarter from $11.72 billion a year earlier.

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