The corporate earnings season for the 3rd quarter got off to a good start on Tuesday on Wall Street, with better-than-expected performance in banking sector. Four of the six largest US banks released Tuesday their third quarter results. This first round of accounts was well received on Wall Street, especially JP Morgan Chase and Citigroup, which exceeded the expectations of financial analysts.
With the closing of Wall Street, JP Morgan Chase stocks jumped 3.3%, rising to its highest level, while Citigroup gained 2.1% Wells Fargo took 2.2% and even Goldman Sachs was up 0.5% despite underperforming results. Asset management giant Blackstone was up 1.3% after strong earnings in the third quarter. Bank of America (which will publish its accounts Wednesday) and Morgan Stanley (expected Thursday) climbed 2.6% and 0.8%, respectively.
In a difficult context, characterized by a slowdown in economic growth, associated with a fall in interest rates, banks seem to have limited the damage.
JP Morgan and Citigroup do better than expected thanks to retail banking.
JP Morgan Chase has published a quarterly profit well above Wall Street expectations thanks to the strength of its bond trading, its activities on the primary market and its income from real estate credit.
“Personal activity remains healthy with wage and spending growth combined with strong balance sheets and low levels of unemployment,” JPMorgan CEO Jamie Dimon said in a statement.
“This is offset by weaker entrepreneurial morale and investment spending fueled by increasingly complex geopolitical risks, including tensions in global trade,” he added.
At Citigroup as well, the retail bank has pulled the activities of the banking group. Sales and profits were slightly above market expectations, despite weakness in trading activities.
Wells Fargo, on the other hand, was disappointed in its profits, but the stock rose in response to stronger earnings than expected, as well as the inauguration of new CEO Charles Scharf next Monday. Investors believe that the bank has “loaded the boat” on the results of Q3, and look forward to much restructuring under the new management.
Wells Fargo continued to suffer following the scandal that erupted three years ago on its business practices. Net income fell 23% in the third quarter to $ 4.6 billion, driven by a dip in real estate revenue and new legal expense charges.
Finally, the investment bank Goldman Sachs suffered in the third quarter. This resulted in a larger than expected decline in net income, which fell 27% to $ 1.79 billion. The group notably cited the contraction of its fees in its M & A advisory business and the weakness of its activity on the primary market.
Goldman Sachs saw its revenues contract in three of its four major divisions, including a decline in investment banking with weaker mergers and acquisitions activity and IPOs. On Wall Street, the title lost up to 2% in session before returning slightly positive late in the day.