Please ensure Javascript is enabled for purposes of website accessibility

What to Expect When JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup Report Earnings

By John Maxfield - Apr 8, 2016 at 2:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Analysts expect earnings per share at the nation's biggest banks to fall from between 6% and 27% in the first quarter of the year.

Image source: iStock/Thinkstock.

The first quarter for most banks ended on March 31, and next week we'll learn how they performed through the first three months of the year. This includes all four of the nation's biggest banks: JPMorgan Chase (JPM 6.19%), Bank of America (BAC 5.94%), Wells Fargo (WFC 5.16%), and Citigroup (C 6.07%).

Bank

1Q16 Earnings Date

JPMorgan Chase

April 13

Bank of America

April 14

Wells Fargo

April 14

Citigroup

April 15

Data source: JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup.

JPMorgan Chase is scheduled to lead the way on April 13. This is appropriate not only because the New York City-based bank is the biggest in the nation. It's also appropriate because JPMorgan's results should give a good overview of what's to come at the three other big banks -- as well as the stand-alone investment banks, Goldman Sachs and Morgan Stanley.

The predictive value of JPMorgan Chase's results follows from the fact that its operations span consumer banking to commercial banking to investment banking. It's a true universal bank. Consequently, we'll get an early look at whether or not it as well as Citigroup were right to predict double-digit declines in trading revenue -- which, it's worth noting, will also impact Bank of America's results, as well as Goldman Sachs and Morgan Stanley's.

We'll also get a glimpse into the likely impact of higher defaults in the energy industry, which continues to suffer from low oil prices. JPMorgan Chase announced recently, for instance, that it added $500 million to its loan loss reserves specifically because of concerns about oil and gas borrowers. This issue isn't unique to JPMorgan Chase, thus it will be telling to see how the bank navigates it.

Bank

1Q15 EPS

1Q16 EPS-Estimated

Change

JPMorgan Chase

$1.45

$1.26

(13%)

Bank of America

$0.27

$0.24

(11%)

Wells Fargo

$1.04

$0.98

(6%)

Citigroup

$1.51

$1.10

(27%)

Data source: Yahoo! Finance.

Bank of America and Wells Fargo are scheduled to report the following day, on April 14. Analysts expect both banks to have earned less in the first quarter of 2016 than they did in the year-ago period. Wells Fargo's earnings per share have been forecast to fall from $1.04 in the first quarter of last year down to $0.98 in the first quarter of this year, according to Yahoo! Finance. And earnings per share at Bank of America are expected to drop by 11%, from $0.27 down to $0.24, for the first three months of the year.

The biggest wild card is Citigroup. Not only has the nation's fourth biggest bank by assets already disclosed that revenues from trading and investment banking will drop by double-digit percentages compared to the first quarter of 2015, but it's also said that it will take a $400 million restructuring charge. The latter is tied to its ongoing efforts to streamline its operations and focus them around global consumer banking and its institutional clients.

For Citigroup in particular, then, an already disappointing quarter seems to be turning into a miserable one. This helps explain why analysts believe that its quarterly earnings per share will drop from $1.51 in the first quarter of 2015 down to only $1.10 in the first quarter of this year.

In sum, lest there be any doubt, banks face challenges on a number of fronts right now, all of which are weighing on earnings. But for savvy investors who aren't dissuaded by the heightened volatility of bank stocks, any drop in the share prices of JPMorgan Chase, Bank of America, Wells Fargo, or Citigroup could very well present an attractive opportunity to buy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Citigroup Inc. Stock Quote
Citigroup Inc.
C
$52.77 (6.07%) $3.02
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$35.87 (5.94%) $2.01
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$124.60 (6.19%) $7.26
Wells Fargo & Company Stock Quote
Wells Fargo & Company
WFC
$43.82 (5.16%) $2.15
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
GS
$316.61 (3.20%) $9.81
Morgan Stanley Stock Quote
Morgan Stanley
MS
$82.31 (3.70%) $2.94

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.