Sign Up

Big Banks Smash Earnings Expectations But Rally Fails To Produce New Fuel

The second-quarter earnings season for banks kicked off with blowout numbers from the biggest names on Wall Street, but investors weren't in the mood to celebrate.

Despite a string of upside surprises in profit and trading performance, investors focused sharply on guidance and margin pressure, sending several top bank stocks lower.

The Financial Select Sector SPDR Fund (NYSE:XLF), which tracks major U.S. banks, slid 1.1% by 10:15 a.m. in New York.

JPMorgan: Strong Results, But Higher Costs Hit Sentiment

JPMorgan Chase & Co. (NYSE:JPM) kicked off earnings season with second-quarter earnings per share of $5.24, blowing past the $4.47 consensus estimate by 17%.

Revenues also came in strong at $45.68 billion, versus the expected $44.05 billion.

The standout driver: investment banking and trading, where equities and FICC (fixed income, currencies and commodities) revenues beat forecasts by $50 million and $470 million, respectively.

Despite a modest miss on net interest income (NII)—$23.31 billion vs. $23.59 billion expected—the bank lifted its full-year NII forecast to $95.5 billion from $94.5 billion.

Return on equity jumped to 18%, well above the 15.1% estimate, and loan growth surged past expectations with $1.41 trillion in total loans.

"JPM delivered on strong fees and raised guidance, even as core ...