The US financial sector is on a roll, with major banks reporting strong third-quarter earnings that are sending their stock prices soaring. The Financial Select Sector SPDR Fund (XLF), a basket of major US bank stocks, is poised to extend its record highs, fueled by this wave of positive results.
The fund gained nearly 0.7% in premarket trading on Wednesday, continuing its upward momentum from last week’s rally. This positive sentiment is also extending to regional banks, as the SPDR S&P Regional Banking ETF (KRE) rose 0.5%.
Goldman Sachs: A Record-Breaking Performance
Goldman Sachs, a Wall Street titan, kicked off the earnings season with a bang, exceeding analyst expectations and driving its stock to a new record high. The bank reported earnings per share (EPS) of $8.40, significantly surpassing the expected $6.88. Revenue for the quarter came in at $12.7 billion, topping the $11.7 billion consensus estimate.
Several key segments contributed to Goldman Sachs’ strong performance. Equities sales & trading revenue surged to $3.5 billion, well above the $2.95 billion estimate. Global banking and markets net revenue also impressed, hitting $8.55 billion, beating the forecast of $7.65 billion.
The bank’s strong performance was further bolstered by a 2.8% quarter-over-quarter increase in total deposits to $445 billion. Assets under management (AUM) also reached $3.1 trillion, exceeding expectations of $2.99 trillion.
The market reacted positively to these results, with shares of Goldman Sachs jumping nearly 3% in premarket trading, reaching a new record high of $537.50.
Bank of America: Solid Growth Across Key Segments
Bank of America followed suit with a strong set of earnings, reporting an EPS of $0.81, surpassing the $0.76 consensus. Revenue for the quarter totaled $25.34 billion, slightly above expectations of $25.25 billion. This growth was driven by solid performance in the bank’s investment banking and trading operations.
Net interest income (NII) rose to $13.97 billion, surpassing the $13.9 billion forecast. Investment banking revenue reached $1.4 billion, exceeding the $1.24 billion estimate. Trading revenue, excluding debt valuation adjustments, hit $4.94 billion, beating the $4.57 billion consensus.
Richard Ramsden, equity analyst at Goldman Sachs, praised Bank of America’s performance, calling it “another well-rounded beat.” He highlighted that NII was 0.5% above the Street due to higher earning assets, loans, and trading balances.
The market responded positively to these results, with Bank of America shares climbing 2% to $42.79 following the earnings report.
Citigroup: Continued Growth in Core Businesses
Citigroup also outpaced analyst expectations, reporting an EPS of $1.51, beating the consensus of $1.31. Revenue for the quarter came in at $20.32 billion, ahead of the $19.86 billion estimate.
FICC sales & trading revenue reached $3.58 billion, in line with forecasts, while equities sales & trading revenue surged to $1.24 billion, far above the $1.03 billion estimate. Wealth management revenue was a bright spot, hitting $2 billion compared to the $1.8 billion forecast.
Markets revenue totaled $4.82 billion, topping estimates of $4.6 billion. Citi’s investment banking revenue also surpassed expectations, coming in at $934 million versus the anticipated $874.5 million.
This strong quarter for Citigroup demonstrates its continued progress in streamlining operations while growing its core business lines. Citigroup shares rose 2.4% to $67.50, reaching levels not seen since mid-July.
Charles Schwab: Recovering Strong
Charles Schwab, a leading financial services company, also joined the list of financial firms delivering upbeat Q3 results. The company reported an EPS of $0.77, exceeding the $0.75 consensus, with revenue of $4.847 billion, just above the $4.786 billion estimate.
This strong performance represents a significant recovery for Schwab, which faced pressure earlier this year. The bank benefited from steady client engagement and favorable market conditions.
The market reacted enthusiastically to these results, with Charles Schwab shares rocketing 9% to $73.78 in premarket trading, putting the stock on track for its best session since July 2023.
These strong earnings results paint a positive picture for the US financial sector, with investors confident that these banks are well-positioned for continued growth in the coming quarters.