JPMorgan Chase (
kicked off big bank earnings season today. Their third-quarter
performances bode well for the remaining financials.
JPMorgan managed to beat Wall Street estimates in large part
because it limited damage from the so-dubbed "
" derivatives trader. Earnings rose 34% year-over-year, with a
profit of $1.40 a share. Analysts were expecting $1.24 per
Wells Fargo's earnings, meanwhile, jumped 22%, while revenues
were up 8% from a year earlier.
With profits up significantly at both banks, why then did the
two stocks slide today?
JPMorgan shares were down just over 1% despite their
surprisingly strong earnings. Well Fargo shares performed even
worse, shedding 2.7%.
A closer look at both banks' earnings reports may reveal the
Wells Fargo's third-quarter shortcomings were more glaring.
Mortgage-banking revenue and profit margin were both less than
expected. Also, revenue was down a tad from the previous
JPMorgan's third-quarter flaws were less obvious. Profits in
its investment-banking wing declined 4% from a year ago and 18%
from the second quarter, including another $449 million in losses
stemming from the infamous London Whale derivatives trader.
However, considering the total losses from those wayward
trades have totaled more than $6 billion, $449 million is chump
Even with both stocks falling, the improved financial
performance from JPMorgan and Wells Fargo has to be an
encouraging sign for investors in the other big banks.
), Goldman Sachs (
), Bank of America (
Morgan Stanley (MS)
all report earnings next week.