The U.S. financial sector has kicked off the third-quarter earnings season with a resounding bang, as major players delivered impressive results that surpassed analyst expectations. JPMorgan Chase, Wells Fargo, Bank of New York Mellon, and BlackRock all reported earnings per share (EPS) that exceeded estimates, signaling a strong start for the financial industry.
JPMorgan Chase, the nation’s largest bank, delivered another standout performance, exceeding both revenue and earnings estimates. The bank reported an EPS of $4.37, well above the analyst consensus of $4.00. Revenue came in at $43.32 billion, topping estimates of $41.82 billion, fueled by strong performance across various segments. Investment banking revenue, equities sales & trading revenue, and FICC sales & trading revenue all exceeded expectations. Net interest income also beat estimates, reaching $23.53 billion. The bank’s net charge-offs were lower than anticipated, and total loans and deposits were slightly above forecasts.
Wells Fargo also posted stronger-than-expected third-quarter earnings, with EPS of $1.42, exceeding the $1.28 consensus. While total revenue narrowly missed estimates, the bank’s efficiency ratio met expectations, suggesting a steady cost-control effort. Notably, the bank’s provision for credit losses was below the consensus, and total average loans were in line with forecasts. Wells Fargo’s CEO highlighted strong growth in fee-based revenue, which rose 16% year-over-year. However, the bank projected that net interest income would decline 8-9% for the full year 2024, leading to some investor caution.
Bank of New York Mellon (BNY Mellon) reported adjusted Q3 2024 EPS of $1.52, beating the analyst consensus of $1.42. Total revenue increased by 5% year-over-year, driven by a 5% rise in fee revenue, bolstered by improved investment performance. The bank also saw a modest increase in net interest income and maintained a focus on efficiency savings. BNY Mellon returned over $1 billion to shareholders through dividends and stock buybacks, achieving a 103% payout ratio year-to-date.
BlackRock delivered strong third-quarter 2024 results, with adjusted EPS of $11.46, comfortably beating consensus estimates of $10.38. Total revenue of $5.2 billion was 4% above analyst expectations, driven primarily by a significant outperformance in performance fees. BlackRock’s organic growth was equally impressive, achieving 8% annualized organic growth for the quarter. This strong performance underscored BlackRock’s ability to capitalize on favorable market conditions and maintain its leadership in asset management.
The positive earnings reports have had a positive impact on stock prices, with shares of each bank responding positively, with notable gains across the board. The Financial Select Sector SPDR Fund (XLF) rallied nearly 2% to fresh record highs, eyeing the strongest-performing day since November 2023. These results suggest that the financial sector is well-positioned for continued growth in the coming quarters, despite potential headwinds from rising interest rates and economic uncertainty.
