Banking

JPMorgan Earnings Beat On Reserves Release; Goldman On Tap

JPMorgan Chase (JPM) beat second-quarter estimates, helped by released loan loss reserves. Fellow Dow Jones giant Goldman Sachs (GS) is on tap before Tuesday’s open. JPMorgan stock fell slightly, while Goldman stock edged lower.




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Big bank stocks have been under pressure recently as Treasury yields are tapering off, while trading revenue is normalizing after pandemic-fueled volatility. But the robust pace of IPOs and M&As buoyed investment banking results.

Meanwhile, the Federal Reserve’s latest stress test results cleared the way for bigger dividends and buybacks from top bank stocks.

JPMorgan Earnings

Estimates: JPMorgan earnings were seen skyrocketing 121% to $3.05 per share, but sales are expected to fall 9% to $29.98 billion.

Results: JPMorgan earnings spiked to $3.78 a share with revenue at $30.5 billion.  The banking giant released $3 billion from loan loss reserves, boosting the bottom line.

Trading revenue came in $6.8 billion, with fixed-income trading revenue down 44% vs. a year earlier.

In June, CEO Jamie Dimon warned that Q2 trading revenue would drop to just above $6 billion from $9 billion in Q1.

Stock: Shares fell 1.1% to 156.30 on the stock market today. JPMorgan stock has a buy point of 167.54 from a flat base, according to MarketSmith chart analysis. The relative strength line is trending upwards.


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Goldman Sachs Earnings

Estimates: Zacks Investment analysts expect Goldman Sachs to post EPS of $9.57, 53% above the year-ago period. They see revenue sliding 14% $11.46 billion.  

Results: Check back later on Tuesday.

Stock: GS stock dipped 0.4% to 379 in premarket trade. The stock’s weekly chart shows a buy point of 393.36 from a flat base. Its relative strength line is ticking up.

Meanwhile, Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC) report on Wednesday. 

Bank Stocks Boost Payouts

Top banks are returning capital to shareholders again without most pandemic-era restrictions after passing the stress tests.

Last month, JPMorgan boosted its quarterly dividend to $1 a share from 90 cents after beginning a $30 billion share repurchase plan in Q1.

Goldman Sachs raised its dividend to $2 a share from $1.25 but didn’t announce a new buyback program.

Morgan Stanley said it’s doubling its dividend to 70 cents a share and plans to buy back up to $12 billion in shares.

Bank of America increased its dividend to 21 cents a share from 18 cents and announced a $25 billion buyback plan in April.

Wells Fargo doubled its dividend to 20 cents after slashing it from 51 cents last year, and OK’s $18 billion in repurchases. Meanwhile, Citigroup kept its payout steady at 51 cents.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.

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