Earnings

Big Banks See Strength In Trading And Digital, But COVID Sinks Their Consumer Businesses

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Big banks kicked off the second-quarter earnings season Tuesday (July 14) by reporting COVID-weakened consumer banking revenues, but bright spots in trading and digital. While JPMorgan Chase and Citi managed to come out ahead of analyst estimates, Wells Fargo posted a top-line miss and a significantly worse-than-expected bottom line.

Here’s a rundown:

Citigroup

Citigroup reported global consumer-banking revenues of $7.3 billion, marking a 10 percent drop year over year. The bank reported an approximately $10.5 billion rise in credit reserves and a decline in cards purchase sales of 24 percent.

North America consumer-banking revenues fell 5 percent year on year to $4.7 billion, while Latin American results dropped 20 percent to $1.1 billion and Asia saw revenues decline 16 percent to $1.5 billion. Equity-markets revenue likewise fell 3 percent to $770 million.

But on the plus side, the company’s fixed-income markets revenues jumped 68 percent to $5.6 billion. All told, Citi reported $19.8 billion of revenues and 50 cents per share in net income compared to analyst estimates of $19.12 billion in revenues and 28 cents per share of earnings.

JPMorgan Chase

JPMorgan Chase’s consumer-banking segment saw revenues drop 26 percent to $5.1 billion. The bank reported reserve builds of $8.9 billion firmwide and a decline in credit card sales volume of 23 percent for its consumer & community banking division.

The firm’s retail-banking division registered a $176 million loss compared to a $4.2 billion profit during the same 2019 period. Nonetheless, CEO Jamie Dimon said the bank “remained active in home lending on the strength of our digital platform, and auto originations picked up in the second half of the quarter, driven by pent up demand in states that are reopening.”

Offsetting the weak retail-banking performance, JPMorgan Chase’s corporate- and investment-banking unit experienced a 16 percent year-on-year revenue growth to $16.4 billion.

In addition, commercial-banking revenues increased 5 percent to $2.4 billion, and asset- and wealth-management revenues rose 1 percent to $3.6 billion. Also, equity-markets revenue jumped 38 percent to $2.4 billion.

As for the bottom line, JPMorgan Chase reported $33 billion of revenues and earnings per share of $1.38 compared to analyst estimates of $30.3 billion and $1.04 per share.

Wells Fargo

Wells Fargo reported that ATM and teller transactions dropped 28 percent amid the continued migration to digital, coupled with temporary branch closures related to the pandemic. The bank reported an $8.4 billion addition to its credit loss reserve in Q2 and that general-purpose credit card volumes fell 22 percent to $15.8 billion.

Wells Fargo reported that the number of general-purpose credit card accounts declined 9 percent to 7.3 million.

Also, consumer loans dropped $15.7 billion on a year-over-year basis, but debit card point-of-sales measured by volume were even at $93.1 billion.

Still, consumer and small-business banking deposits jumped by 19.8 percent to $894.1 billion.

Digital active customers (mobile and online) also increased 4 percent to 31.1 million, thanks in part to a 6 percent rise in mobile active clients to 25.2 million.

All told, the bank’s revenues totaled $17.8 billion and Wells Fargo lost 66 cents per share. That fell short of analyst estimates of $18.4 billion in revenues and a 20-cent-per-share loss.

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