Quick overview of banking results: JPM, Citigroup, WFC

SP:SPX   S&P 500 Index
The last week brought earnings from three major U.S. banks, including Citigroup, JP Morgan Chase & Co., and Wells Fargo. Overall, the results for the first quarter of 2023 were mixed, with indicators pointing to positive and negative trends. All three banks showed solid growth in revenue and non-interest income. However, declining deposits and loans paint a worrisome picture for the industry (together with rising provisions for credit losses). As a result, we believe the theme of banking earnings will be “big capitalized banks that can make money even in the current environment versus small, less resilient banks facing obstacles ahead.”

Citigroup Inc. reported a net income of $4.6 billion (up 7% YoY but down 19% YoY when excluding divesture-related impacts) for the first quarter of 2023, compared to $4.3 billion for the same period in 2022. The bank’s revenues grew 12% YoY (or 6% YoY excluding divestiture-related impacts) and 19% QoQ. Operating expenses rose by 1% YoY and 2% QoQ. Citigroup's end-of-period loans were $652 billion at quarter end, down 1% YoY. Deposits remained unchanged versus the prior year, standing at $1.3 trillion.

JP Morgan Chase & Co.
For the first quarter of 2023, JPMorgan Chase & Co reported $12.6 billion in net income (up 52% YoY and 15% QoQ) and record managed revenue of $39.3 billion (up 25% YoY and 11% QoQ). Its noninterest expenses rose to $20.1 billion (by 5% YoY and 6% QoQ). The Consumer & Community Banking division had an ROE of 40%, with average deposits down 4% YoY and client investment assets down 1% YoY. The Commercial Banking division saw its average loans grow 13% YoY and 1% QoQ. However, it experienced a decline in average deposits of 16% YoY and 5% QoQ. Meanwhile, the Asset Wealth Management division saw average loans drop by 1% YoY and 1% QoQ, with average deposits declining as much as 22% YoY. The bank’s total deposits dropped by 7% YoY and average deposits by 14% YoY and 3% QoQ.

Wells Fargo
Wells Fargo reported $4.9 billion (up 32% YoY and 52% QoQ) in net income and $20.7 billion in total revenue (up 17% YoY and 3% QoQ) for the first quarter 2023. Net interest income rose by 45% YoY, while noninterest income dropped 13% YoY. Period-end deposits decreased by 8% YoY and 2% QoQ. Furthermore, period-end assets fell by 3% YoY.

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