Overall, U.S. banks revealed a mixed bag of earnings in the first quarter of the year. Many firms like Citigroup and KeyCorp demonstrated strength in investment banking and personal banking segments, albeit facing challenges in net interest income and credit losses. Goldman Sachs reported robust earnings powered by capital market activities and wealth management growth, while PNC Financial Services Group emphasized balance sheet strength amid market challenges. Regions Financial Corp showcased resilience in revenue streams but experienced expense management difficulties. First Citizens BancShares saw significant growth following the successful integration of Silicon Valley Bank. Bank of America demonstrated strong investment banking performance and digital platform growth, despite challenges in commercial real estate. JPMorgan Chase reported solid financials but noted rising expenses and credit costs.

Top Portfolio Holdings

Goldman Sachs Group Inc (NYSE: GS)

Portfolio weight: 6.82%*
EPS Estimate: 8.56
Reported EPS: 11.58

“Our first quarter results reflect the strength of our world-class and interconnected franchises and the earnings power of Goldman Sachs. We continue to execute on our strategy, focusing on our core strengths to serve our clients and deliver for our shareholders.” – David Solomon, Chairman, and CEO.

Goldman Sachs reported strong first quarter results with net revenues of $14.2 billion and net earnings of $4.1 billion, marking a robust start to the year. The firm is benefiting from the reopening of capital markets, with a surge in IPOs and record investment grade issuances. Assets under supervision in Asset and Wealth Management reached a new record of $2.8 trillion, indicating significant growth in this segment. The company is also focusing on artificial intelligence and technology investments to enhance operational efficiency. Additionally, Goldman Sachs plans to significantly expand its assets in private credit, aiming to grow from approximately $130 billion to $300 billion over the next five years.

First Citizens BancShares Inc (NASD: FCNC.A)

Portfolio weight: 6.76%*
EPS Estimate: 43.34
Reported EPS: 52.92

“We are pleased with our first quarter performance where we delivered strong financial results. We posted solid loan and deposit growth and credit quality held up well. Our capital and liquidity levels increased, positioning our balance sheet well for further growth. It’s been over one year since SVB became part of First Citizens, and we continue to successfully execute on our integration efforts, which are accelerating the momentum of our franchise. We believe we are well-positioned to continue delivering strong financial results while executing on our strategic plan.” – Frank B. Holding Jr, Chairman and CEO.

First Citizens BancShares reported a significant earnings per share increase, with a 92% adjustment for notable items and a 14% increase over the sequential quarter, exceeding expectations. The successful integration of Silicon Valley Bank (SVB) has led to client retention, deposit balance stabilization, and strategic priority development, with over 1000 new clients onboarded post-acquisition. Despite challenges in the venture capital environment and increased regulatory and compliance costs, the bank has shown strong credit performance and guidance, with net charge offs declining and a positive adjustment to the net interest income forecast for the full year.

Citigroup Inc (NYSE: C)

Portfolio weight – 6.61%*
EPS Estimate: 1.23
Reported EPS: 1.58

“Our balance sheet is strong across the board, an intentional result of our high-quality assets, robust capital and liquidity positions, and rigorous risk management. We returned $1.5 billion in capital to our common shareholders. With the organizational simplification behind us and a good quarter under our belt, we have started this critical year on the right foot.” – Jane Fraser, CEO.

Citigroup reported a 35% increase in investment banking revenue, driven by strong performance in Debt Capital Markets and Equity Capital Markets, and gathered $22 billion of net new assets, indicating robust demand and trust in its services. US Personal Banking saw double-digit revenue growth for the sixth consecutive quarter. However, the company faced challenges with a decline in net interest income, higher card net credit loss, and expenses outpacing revenue growth. Despite these challenges, Citigroup maintains a strong balance sheet and is focusing on optimizing its wealth business for improved returns.

Bank of America Corp (NYSE: BAC)

Portfolio weight: 6.44%*
EPS Estimate: 0.76
Reported EPS: 0.83

“We reported a strong quarter as out businesses performed well, adding clients and deepening relationships, we reached 36.9 million consumer checking accounts, with 21 consecutive quarters of net checking account growth.” – Brian Moynihan, Chair, and CEO.

Bank of America reported a significant rebound in its Investment Banking sector with fees growing 35% to nearly $1.6 billion, driven by market share expansion and the scaling of middle market investment banking teams. The bank also saw robust organic growth in its digital platform, adding 245,000 net new checking accounts and reaching a milestone of over 2 billion interactions with its digital assistant ‘Erica’. Net Interest Income for Q1 exceeded expectations at $14.2 billion, $100 million higher than the previous quarter. However, the bank experienced an increase in net charge-offs to $1.5 billion, particularly in the commercial real estate sector. Despite economic uncertainty, Bank of America reported strong deposit growth, exceeding loan growth for the third consecutive quarter.

PNC Financial Services Group Inc (NYSE: PNC)

Portfolio weight: 6.30%*
EPS Estimate: 3.01
Reported EPS: 3.36

“PNC delivered solid first quarter results generating net income of $1.3. During the quarter, we grew customers, reduced expenses, increased spot deposits, maintained stable credit quality and continued to build upon our strong liquidity and capital positions. The strength of our balance sheet, diverse business mix, and the quality of our people, position us well for continued growth across our franchise as the year progresses.” – Bill Demchak, Chairman, and CEO.

PNC Financial Services Group reported a strong first quarter with a net income of $1.3 billion and adjusted earnings per share of $3.36, despite facing challenges such as a decline in net interest income and loan portfolio. The company announced a significant branch network expansion with a nearly billion-dollar investment to renovate and open new branches, aiming to drive growth and increase market share. However, concerns were raised over credit quality in the commercial real estate office sector, with non-performing loans increasing by $200 million. Despite these challenges, PNC remains optimistic about the economic outlook, projecting real GDP growth at approximately 2% for 2024, and has committed to returning $759 million to shareholders through repurchases and dividends.

JPMorgan Chase & Co (NYSE: JPM)

Portfolio weight: 6.30%*
EPS Estimate: 4.11
Reported EPS: 4.44

“We continue to be a pillar of strength for our clients, communities, and markets across the world – while also delivering for shareholders. This quarter, we grew customers, continued to position the Firm for the future, maintained our fortress principles, raised the dividend, and played a critical role in driving economic growth by extending credit and raising capital totaling more than $655 billion.” – Jamie Dimon, Chairman, and CEO.

JPMorgan Chase reported a strong financial performance with a net income of $13.4 billion and a return on tangible common equity (ROTC) of 21%. The integration of First Republic contributed significantly to the firm’s financials, adding $1.7 billion of revenue and $668 million of net income. Firm-wide revenue increased by 4% year-on-year to $40.9 billion, driven by higher rates and balance sheet mix. However, the firm also faced challenges with expenses rising by 9% year-on-year to $22 billion and an increase in credit costs to $1.9 billion, indicating rising operational costs and credit risk. Despite these challenges, sectors such as Consumer & Community Banking, Investment Banking, Commercial Banking, and Asset & Wealth Management all reported growth in net income and revenue.

Regions Financial Corp (NYSE: RF)

Portfolio weight: 6.04%*
EPS Estimate: 0.45
Reported EPS: 0.37

“We continue to focus on the successful execution of our strategic plan, and that is reflected in our core performance,” – John Turner, Chairman and CEO.

Regions Financial Corporation reported first quarter earnings of $343 million with adjustments for specified items impacting net earnings, highlighting the importance of operational performance clarity. Revenue resilience was evident with $1.8 billion reported, demonstrating the company’s ability to maintain revenue streams amid macroeconomic challenges. However, the company faced challenges in expense management with an increase in adjusted non-interest expenses and operational losses due to check-related warranty claims. Positive notes included consistent asset quality, an expected growth in net interest income in the second half of the year, and a 6% increase in adjusted non-interest income driven by capital markets and M&A activity.

KeyCorp (NYSE: KEY)

Portfolio weight: 6.00%*
EPS Estimate: 0.22
Reported EPS: 0.22

“We are off to a solid start in 2024. Investment Banking posted its best first quarter in our history, net interest income was within the range of guidance that we provided in January, and expenses remained well controlled.” – Chris Gorman, Chairman, and CEO.

KeyCorp reported its best first quarter in investment banking history with a 6% increase in fees, indicating strong sector growth. The company also saw a 25% year-over-year increase in retail relationship households and a 6% increase in commercial clients, alongside a strategic partnership with Blackstone to manage credit risk and accelerate growth. Despite these positives, KeyCorp faced challenges including a decline in net interest income by 4.5%, a 2.6% sequential decline in average loans, and increased deposit costs, which could pressure future profitability. However, assets under management surpassed $57 billion, and the company remains confident in meeting its 2024 financial targets.

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*Portfolio weight as at April 30, 2024

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