Big Banks in Focus as Q1 Earnings Draw Focus of US Investors

This week will draw the collective focus of Wall Street, as a number of leading banks are poised to announce their earnings, having begun earlier today with JPMorgan Chase & Co.'s (NYSE:JPM) early market release.

Q1 Earnings season kicked off in US equity markets last week with the April 8 report from Alcoa Inc. (NYSE:AA) – shares of the global aluminum juggernaut dropped more than 3% after the firm’s quarterly revenue and forecast for aluminum demand fell short of Wall Street consensus expectations. The event helped serve as a harbinger for many other companies and investors, who collectively fear the effect of a stronger US dollar (USD) on earnings and revenues.

JPMorgan & Chase First in Line

Earlier today, JPMorgan (NYSE:JPM) released its first-quarter results, which were highlighted by Q1 2015 net income of $5.91 billion, or $1.45 per share. This corresponded to an increase of $645 million or 12% YoY. In addition, the largest US lender by assets reported revenue of $24.8 billion in Q1 2015, up $967 million from the previous year. At the time of writing, shares of JPM were trading in positive territory at $62.85, up 1.26% on the news.

According to Jamie Dimon, Chairman and CEO of JPMorgan & Chase, in a recent statement on the earnings, “Consumer & Community Banking saw healthy growth in deposits, investment assets and loans and continued to deepen relationships. In Mortgage, we had higher originations and continued to add high-quality loans to our balance sheet while managing expenses.”

Wells Fargo

In addition, Wells Fargo & Co. (NYSE:WFC) is also on the clock to release its Q1 earnings, having already posted Q4 2014 earnings that were in line with consensus of Wall Street expectations in January.

Analysts are expecting Wells Fargo (NYSE:WFC) at 8:00 ET (13:00 GMT) to report consensus net income of $5.15 billion, or earnings per share of $0.98, and revenue of $21.24 billion, compared with a profit of $5.61 billion, or earnings per share of $1.05, and revenue of $20.63 billion a year earlier. At the time of writing, shares of (NYSE:WFC) were trading at $54.5 per share in pre-market trading, down 0.16%.

Bank of America

Bank of America Corp. (NYSE:BAC) is looking to atone to investors following a disappointing Q4 release this past January, which reported an 11% drop in Q4 profit – the bank attributed the decline to lower revenue from fixed-income trading.

Bank of America (NYSE:BAC) is poised to announce its earnings Wednesday at 7:00 ET (12:00 GMT). Investors will be eying BAC’s revenue in Q1 after its fixed-income division toppled by more than 20%, to $1.46 billion, exacerbated by weaknesses in credit and mortgage trading.

The consensus forecast for Bank of America in Q1 2015 is a net income of $3.35 billion, or earnings per share of $0.29, and revenue of $21.5 billion, compared with a loss of $514 million, or an earnings-per-share loss of $0.05, and revenue of $22.7 billion a year ago in 2014. Currently, shares of (NYSE:BAC) were trading at $15.93 per share in pre-market trading, up 0.76%.

Goldman Sachs

Goldman Sachs Group Inc. (NYSE:GS), traditionally a strong performer across a number of businesses, including bond trading, incurred a substantial blow during Q4, suffering a 29% drop in the division. The company pointed to market Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term, weakness in oil prices, and global economic growth headwinds.

The company will be releasing its earnings on Thursday ahead of the US market opening, with a consensus forecast of net income of $1.904 billion, or earnings per share of $4.21, and revenue of $9.34 billion. This compares with a profit of $1.949 billion, or earnings per share of $4.02, on revenue of $9.33 billion a year ago. Ahead of the opening at the time of writing, Goldman shares were trading at $196.06, up 0.25% a share in pre-market trading.

Citigroup

Finally, Citigroup Inc.’s (NYSE:C) perhaps suffered the most broad-based weakness of the major banks in Q4 2014, with its earnings collapsing 86% due to a $3.5 billion charge from legal costs related to an investigation into the bank manipulating the foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (FX) market.

The massive sum of $3.5 billion vastly outweighs the legal fees of only $1 billion during the same period a year earlier. Moreover, the bank’s effective tax rate was 72% in the Q4, constituting a jump from 32% in the Q4 2014, which further bogged down the bank.

Thursday will see Citigroup (NYSE:C) releasing its earnings at 8:00 ET (13:00 GMT) – the bank is expected to post net income of $4.23 billion, or earnings per share of $1.39, and revenue of $19.8 billion. This compares with a profit of $3.76 billion, or earnings per share of $1.23, and revenue of $20.1 billion a year ago. Shares of Citigroup stock are currently trading at $53.11 per share, up 0.84% in pre-market trading.