US Banks Top Q3 Earnings Estimates: JPMorgan Delivers 'Robust Beat,' Financial Sector Stocks Hit Record Highs

The U.S. financial sector kicked off the third-quarter earnings season on a high note as major players, including JPMorgan Chase & Co. JPM, Wells Fargo Corp. WFC, Bank of New York Mellon Corp. BK, and BlackRock Inc. BLK, all beat analyst expectations for earnings per share (EPS).

These results mark a strong start for the financial industry. Shares of each bank responded 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.

Chart: XLF ETF Sets New All-Time Highs As Major Banks Report Strong Q3 Earnings

JPMorgan Chase Q3 2024: A Beat Across The Board

JPMorgan Chase delivered another standout performance last quarter, surpassing both top and bottom-line 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 stronger-than-expected performance across various segments.

Investment banking revenue: $2.35 billion vs. $2.13 billion expected
Equities sales & trading revenue: $2.62 billion vs. $2.37 billion estimate
FICC sales & trading revenue: $4.53 billion vs. $4.36 billion expected
Net interest income: $23.53 billion, beating the $22.8 billion estimate

The bank’s net charge-offs were $2.09 billion, below the $2.37 billion forecast, while total loans stood at $1.34 trillion, just edging past the expected $1.33 trillion. Total deposits reached $2.43 trillion, slightly above estimates.

Goldman Sachs analyst Richard Ramsden praised the bank’s “robust beat across every line,” noting JPMorgan’s operational strength. Management also raised its full-year 2024 net interest income (NII) guidance to $92.5 billion, up $1 billion from prior estimates, while slightly lowering expense forecasts.

Stock Reaction: JPMorgan shares surged over 5% in early trading, reflecting investor confidence in the bank’s strong results and upgraded outlook.

Wells Fargo: Solid Earnings But Weaker NII Guidance

Wells Fargo also posted stronger-than-expected third-quarter 2024 earnings, with EPS of $1.42, exceeding the $1.28 consensus. Total revenue reached $20.37 billion, narrowly missing the estimate of $20.41 billion.

While the bank’s net interest income (NII) fell short at $11.69 billion versus the expected $11.88 billion, its efficiency ratio of 64% matched market expectations, suggesting a steady cost-control effort.

The bank’s provision for credit losses was $1.07 billion, below the $1.34 billion consensus. Meanwhile, total average loans stood at $910.3 billion, in line with forecasts.

Wells Fargo’s CEO emphasized strong growth in fee-based revenue, which rose 16% year-over-year. However, the bank projected that NII would decline 8-9% for the full year 2024, leading to some investor caution.

“We expect a moderately positive investor response to results, as guidance implies no change to 4Q24 NII, and thus the same NII jumping off point for 2025,” Goldman Sachs’ Ramsden wrote.

Stock Reaction: Despite the slight revenue miss and cautious guidance, Wells Fargo shares jumped 5.5%, boosted by optimism about the bank’s ability to manage expenses and future growth.

Bank of New York Mellon: Strong Fee Revenue Drives Beat

Bank of New York Mellon (BNY Mellon) reported adjusted Q3 2024 EPS of $1.52, beating the analyst consensus of $1.42. The bank’s total revenue increased by 5% year-over-year to $4.648 billion, exceeding the $4.542 billion estimate. This growth was driven by a 5% rise in fee revenue, which reached $3.404 billion, bolstered by improved investment performance.

Net interest income also saw a modest 3% increase year-over-year. Meanwhile, noninterest expenses were flat at $3.1 billion, reflecting the company’s 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.

“The firm’s fee growth algo remains somewhat underappreciated by the market, which we think collectively sets up the stock well for durable EPS growth over the coming years and further upside to the stock,” Ramsden wrote.

Stock Reaction: Shares of BNY Mellon rose nearly 2%, and they are on track for their sixth straight session of gains, which has seen the stock hit new highs.

BlackRock: Performance Fees Power Earnings Beat

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, coming in at $388 million vs. $168 million expected.

BlackRock’s organic growth was equally impressive. With $221 billion in total flows, it achieved 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.

“We think BLK’s 3Q results clear a relatively high bar underscored by accelerating flow trends,” Ramsden said.

Stock Reaction: BlackRock shares surged over 4%, hitting record highs and marking the stock’s strongest session of the year.

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Image created using artificial intelligence via Midjourney.