Earnings season kicks into high gear on Wall Street this week, with five major U.S. banks -- JPMorgan Chase & Co., Wells Fargo & Co., Bank of America Corp., Citigroup Inc. and Goldman Sachs Group Inc. -- slated to post quarterly financial results. A sixth bank, Morgan Stanley, is scheduled to disclose its results next week.
Wall Street forecasts corporate earnings to have fallen 3.1 percent in the second quarter from a year ago, according to analysts polled by Thomson Reuters.
Shares of JPMorgan Chase (NYSE:JPM) edged up 0.5 percent Tuesday to $68.68 after the biggest U.S. bank by assets beat Wall Street expectations on earnings and revenue, helped by lower expenses.
JPMorgan's fiscal second-quarter net income rose to $6.3 billion, or $1.54 per share, on revenue of $24.5 billion, compared with a profit of $5.6 billion, or earnings per share of $1.46, on revenue of $25.3 billion a year ago.
Analysts polled by Thomson Reuters had expected earnings per share of $1.44 on revenue of $24.5 billion.
Revenue from the bank’s fixed-income trading unit tumbled 21 percent to $2.93 billion. However, the bank sold its physical commodities business to Mercuria last year for $3.5 billion. Adjusted for the sale, revenue from the bank’s fixed-income trading unit would have declined 10 percent.
In April, JPMorgan announced its quarterly profit gained 12 percent in the first quarter from a year ago to nearly $6 billion after revenue from its fixed-income trading unit rebounded. The investment giant previously saw its fourth-quarter profit tumble 6.6 percent due to $1.1 billion in legal expenses.
Shares of JPMorgan have jumped more than 20 percent in the last year.
Meanwhile, shares of Wells Fargo (NYSE:WFC) rose 0.3 percent to $56.92 Tuesday despite the fourth-largest U.S. bank posting earnings in line with Wall Street expectations. The San Francisco bank’s results were driven by strong growth in loans and deposits compared with a year ago, but lower fees weighed on revenue growth.
Higher interest rates also hurt revenue from the company's mortgage banking unit as revenue fell 1 percent to $1.71 billion in the second quarter from a year earlier. Mortgage rates jumped to an eight-month high last month, rising above 4 percent.
The average rate on a 30-year fixed-rate mortgage rose to 4.19 percent during the week ended June 26, according to bankrate.com. In mid-April, mortgage rates were at the lowest point in nearly two years when the average 30-year fixed mortgage rate was 3.79 percent.
Wells Fargo posted fiscal second-quarter net income of $5.72 billion, or $1.03 per share, on revenue of $21.3 billion. That compares with a profit of $5.73 billion, or earnings per share of $1.01, on revenue of $21.07 billion a year earlier.
Analysts had expected Wells Fargo to report earnings per share of $1.03 on revenue of $21.7 billion.
Well Fargo, the biggest mortgage lender, announced in April it saw its first-quarter profit decline 3 percent from a year earlier as expenses rose, marking the bank's first profit drop in more than four years. Of the large banks, Wells Fargo has been more negatively affected than peers by low interest rates and shrinking net interest margins.
Looking ahead this year, the financial sector looks set to benefit as the Fed is expected to raise interest rates either at its June or September meeting. A hike in interest rates would improve the net interest margins of large banks.
Shares of Wells Fargo have gained more than 10 percent in the last 12 months.