Time for Big Bank ETFs on Upbeat Earnings?

In the third quarter of 2024, Wall Street's largest banks recorded a notable rebound, driven by increased corporate activity in debt issuance and mergers. Many of these banks reported strong trading performances, which helped offset uneven consumer banking results to some extent.

Collectively, Goldman Sachs GS, Bank of America BAC, Citigroup C, and JPMorgan Chase JPM reported combined investment banking fees of $6.5 billion, a 27% increase year-over-year. Combined trading revenue for these banks reached $23.4 billion, up 6% from the previous year.

Goldman Sachs Posts Strong Investment Banking Growth

On Oct. 15, 2024, Goldman Sachs saw a 20% increase in investment banking fees compared to the same period last year. The Goldman Sachs’ third-quarter 2024 adjusted earnings per share of $8.40 surpassed the Zacks Consensus Estimate of $6.85.

Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.

Net revenues for the quarter of $12.7 billion increased 7.5% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $11.63 billion. The bank’s CEO, David Solomon, noted renewed client optimism thanks to the onset of the Fed’s rate-cutting cycle. Goldman’s trading revenue increased 2%, while asset and wealth management revenue surged 16%.

Bank of America Reports Record Trading Revenue

On Oct. 15, Bank of America reported third-quarter 2024 earnings of 81 cents per share, which surpassed the Zacks Consensus Estimate of 78 cents. Net revenues were $25.35 billion, which beat the Zacks Consensus Estimate of $25.29 billion.

The bank achieved its highest-ever third-quarter trading revenue. Trading income grew by 12%, with equity and debt issuance revenues increasing 16% and 37%, respectively. CEO Brian Moynihan highlighted growth in investment banking, asset management, and trading as key drivers of performance.

Citigroup Sees Strong Trading Performance

On Oct. 15, Citigroup reported its strongest third-quarter trading performance in over a decade, despite some challenges. Citigroup’s third-quarter 2024 adjusted net income per share of $1.51 surpassed the Zacks Consensus Estimate of $1.34.

Revenues, net of interest expenses, moved up 1% year over year to $20.32 billion in the third quarter. The top line surpassed the Zacks Consensus Estimate of $19.90 billion. Investment banking fees rose by 44%.

Wells Fargo Earnings Beat on Higher Fee Income, Lower Expenses

Last week, Wells Fargo & Company reported its third-quarter 2024 adjusted earnings per share of $1.52, which surpassed the Zacks Consensus Estimate of $1.27. Quarterly total revenues were $20.37 billion, missing the Zacks Consensus Estimate of $20.38 billion.

Results benefited from higher non-interest income. An improvement in capital ratios, a decline in provisions and non-interest expenses were other positives. However, the decrease in net interest income (NII), as well as loans balances were the undermining factors.

JPMorgan Earnings and Revenues Beat Estimates

Last week, JPMorgan Chase & Co. came out with quarterly earnings of $4.37 per share, beating the Zacks Consensus Estimate of $4.02 per share. This compares to earnings of $4.33 per share a year ago.  JPMorgan Chase & Co., which belongs to the Zacks Banks - Major Regional industry, posted revenues of $42.65 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 3.87%.

What Lies Ahead?

Looking ahead, while banks are hopeful about a healthy economic environment, concerns persist related to likely economic disruptions or geopolitical events that could impact future performance. If Trump manages to win the presidential election, bank stocks have higher chances of gain.

All the aforementioned financial companies have considerable exposure in funds like iShares U.S. Financial Services ETF IYG, Invesco KBW Bank KBWB, Financial Select Sector SPDR XLF, U.S. Broker-Dealers Index Fund IAI and Vanguard Financials ETF VFH. Investors can keep a close track of these ETFs in the near term.

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The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
 
Bank of America Corporation (BAC): Free Stock Analysis Report
 
JPMorgan Chase & Co. (JPM): Free Stock Analysis Report
 
Citigroup Inc. (C): Free Stock Analysis Report
 
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
 
Invesco KBW Bank ETF (KBWB): ETF Research Reports
 
iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI): ETF Research Reports
 
iShares U.S. Financial Services ETF (IYG): ETF Research Reports
 
Vanguard Financials ETF (VFH): ETF Research Reports

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