Takeaway From Big Bank Earnings? Consumers Looking Healthier as Loans Grow

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Big bank earnings dominate the proceedings today, and what we saw looked pretty good as results pointed to a healthy consumer. Credit card divisions and business loans sent positive signals, even as trading revenue came in a little light.

JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Co (NYSE: WFC) and Citigroup Inc (NYSE: C) reported Q2 results before the open, and all easily beat analysts’ consensus bottom-line expectations. Arguably, JPM posted the strongest results, with earnings per share of $1.82 way above consensus of $1.58, and revenue of $26.41 billion topping consensus of $24.96 billion.

Citigroup reported EPS of $1.28, compared with estimates for $1.21, and revenue of $17.9 billion topped estimates for $17.32 billion. WFC’s EPS of $1.07 came in above estimates for $1.01 per share, and revenue of $22.17 billion was a little light compared with estimates for $22.47 billion.

While the big banks benefited from rising interest rates and in some cases better commercial lending, trading was a sore spot, especially for C and JPM. The banks said lower volatility in the markets hurt trading volume, with fixed income trading hitting C in particular. That didn’t really come as a surprise, because bank executives had already given some warnings about the trading environment, and anyone who’s watched the markets over the last three months is probably well aware of the lack of volatility.

What really stood out is that all the results showed the consumer being healthy, which is a good sign. Credit card divisions generated more revenue than expected, and business loans also came in strong. Mortgage activity slowed down a little, which probably affected WFC more than the others, but that might have been cyclical.

Remember to pay close attention to what bank CEOs say on their earnings calls, which should be available on company web sites if you missed the live broadcasts this morning. Last quarter, we heard some bank CEOs say great things about the market. The question is whether they still feel the same way three months later. Also, last year many bank CEOS were …

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