Bank of America Tops Q3 Earnings Views; Wells Fargo On Tap

Bank of America ( BAC ) reported better-than-expected earnings Friday morning, while Wells Fargo ( WFC ) is also due to release third-quarter results before the opening bell.

Bank of America

Estimates: Earnings per share of 46 cents, up 12%, on revenue of $21.981 billion, a 2% gain.

Results: EPS was 48 cents with revenue of $22.070 billion. Revenue for fixed income, currencies and commodities fell 22%, but rose 2% for equities. Overall BofA’s loan loss reserves fell by 2% but climbed $200 million for credit cards, as other Wall Street giants up card reserves due to rising charge-offs.

Shares rose 1% before the open on the stock market today. The stock on Thursday fell 1.5% to close right at its 25.45 entry.

Wells Fargo

Estimates: EPS to rise 1% to $1.04 on essentially flat revenue of $22.32 billion.

Results: Coming soon.

Shares were not yet trading Friday. The stock fell on Thursday, moving further from a double-bottom base  buy point of 56.70.

Wells Fargo continues to deal with scrutiny over its sales practices amid allegations of fabricating accounts, altering home loans and giving customers auto insurance they didn’t want. Analysts, as they have for the past year, will be looking for signals that the bank can make things right with consumers and investors.

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Across most of the big money center banks, trading has been a sore spot for the the second and third quarters as well, and could be for the rest of the year. Banks face particularly tough comparisons to 2016, when surprises like Brexit and President Trump’s election spurred brisk trading activity.

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JPMorgan Chase ( JPM ), which reported third-quarter earnings on Thursday, forecast weak fourth-quarter trading results, saying there was nothing obvious on the horizon that would give them a boost.

Still, JPMorgan’s third-quarter EPS topped estimates. Lending was solid. Higher interest rates, a result of rate hikes from the Federal Reserve, also helped. Citigroup’s ( C ) results were also better than analysts expected.

But analysts raised concerns about the increases in provisions set aside for loan losses for the banks.

Citigroup in Q3 set aside an extra $500 million related to its North American card business, based on its expectations for bad loans and the effects of recent hurricanes. JPMorgan said net card charge-offs were higher during the third quarter that it had added $300 million in credit-card reserves, largely due to the “seasoning of newer vintages.”

Analysts have said that investments in Citigroup’s Costco ( COST ) card, and other cards, could start adding to earnings in the second half of this year. But Citigroup’s branded-card revenues in North America fell 1% in the third quarter.

CFO John Gerspach said that the Costco card “remains a real winner” and that they were seeing growth in account balances and purchases.

JPMorgan and Citigroup were not yet trading.


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