Summary
The Q2 2024 earnings season for US financials and banks revealed robust financial performance across the sector, marked by consistent earnings beats, strong revenue growth, and strategic investments in technology and digital platforms.
Earnings and Revenue Outperformance
Most banks reported earnings per share and revenue that surpassed analyst estimates, demonstrating strong operational efficiency and effective cost management. Revenue growth was driven by diverse segments such as global banking, wealth management, investment banking, and trading. Banks like Goldman Sachs and Bank of America highlighted significant contributions from their wealth management and global banking divisions. Citigroup noted strong performance in its equity derivatives and investment banking segments, with overall revenue increasing by 4%.
Client Growth and Digital Adoption
Many banks experienced notable client growth and increased digital engagement. Bank of America added hundreds of thousands of new checking accounts and continued to see a rise in digital banking adoption, with over 47 million active mobile app users. Similarly, First Citizens BancShares reported growth in both loans and deposits, reflecting successful client acquisition strategies.
Capital Strength and Shareholder Returns
Strong capital positions and shareholder returns were common themes. Banks like JPMorgan Chase and Goldman Sachs increased their quarterly dividends and announced share repurchase plans. JPMorgan Chase, for instance, raised its quarterly dividend by 19% and highlighted a CET1 capital ratio of 15.3%, indicating robust financial health.
Strategic Investments and Technology
Strategic investments in technology and infrastructure modernization were emphasized. Bank of America allocated nearly $4 billion for technology investments this year, while Citigroup focused on enhancing its operational efficiency through technology upgrades. These investments are aimed at driving future growth and improving client service.
Top Portfolio Holdings
Goldman Sachs Group Inc (GS)
Portfolio weight: 7.07%
- EPS: $8.62 reported vs $8.35 estimated
- Revenue: $12.73B reported vs $12.38B estimated
“We are pleased with our solid second quarter results and our overall performance in the first half of the year, reflecting strong year-on-year growth in both Global Banking & Markets and Asset & Wealth Management. Our One Goldman Sachs operating approach is allowing us to bring the whole firm to our clients, deepening our relationships and serving them in an improving, but complex environment.” – David Solomon, CEO
Goldman Sachs reported strong year-on-year growth with a notable 10.9% ROE for Q2 and 12.8% for the first half, underpinned by solid performance in global banking and markets, and asset wealth management. Assets under supervision reached a record $2.9 trillion, with wealth management client assets at approximately 1.5 trillion, indicating robust client attraction and retention. The company highlighted significant fundraising success, raising $36 billion year to date in alternatives, and anticipates exceeding $50 billion. Record financing revenues of $2.2 billion for Q2 and a 9% increase in quarterly dividend to $3 per share reflect strong financial health and shareholder value focus. However, challenges with stress test results and an increased stress capital buffer were noted, signaling potential regulatory hurdles ahead.
Bank of America Corp (BAC)
Portfolio weight: 6.70%
- EPS: $0.83 reported vs $0.799 estimated
- Revenue: $25.37B reported vs 25.32B estimated
“Our team produced another strong quarter, serving a growing client base. The strength and earnings power of our leading Consumer Banking business is complemented by the growth and profitability of our Global Markets, Global Banking, and Wealth Management businesses. Out Global Markets business delivered its ninth consecutive quarter of year-over-year revenue growth in sales and trading, earning double-digit returns. Our investments in this business are delivering for our shareholders.” – Brian Moynihan, CEO
Bank of America reported a strong quarter with a net income of $6.9 billion and an 83 cents diluted EPS, highlighting a robust and diversified business model. The bank saw a 6% year-over-year revenue growth driven by a significant increase in asset management and investment banking fees. It added 278,000 net new checking accounts and 6,100 new relationships in Wealth Management, underscoring successful customer expansion and digital banking adoption with over 47 million active mobile app users. Strategic investments in technology and new financial centers are positioning the bank for future growth, with nearly $4 billion allocated for technology this year. The bank’s capital strength allowed for $3.5 billion in share repurchases and a 8% increase in the quarterly dividend, alongside expectations for Net Interest Income growth and a stable credit quality outlook.
First Citizens BancShares Inc (FCNCA)
Portfolio weight: 6.61%
- EPS: $50.87 reported vs $44.85 estimated
- Revenue: $2.46B reported vs $2.29B estimated
“We are pleased with our second quarter financial results, which reflected broad-based loan and deposit growth, strong profitability metrics and continued stabilization of credit. These results reflected the solid performance from all of our business segments and we were encouraged by the continued progress in our SVB Commercial segment, which achieved both loan and deposit growth. In addition, we are pleased to announce that our Board of Directors approved a share repurchase plan for the repurchase of up to $3.5 billion of our Class A common shares, with repurchases expected to begin during the third quarter of 2024.” – Frank B. Holding, CEO
First Citizens BancShares showcased a strong financial performance in Q2 2024, with significant achievements including a $3.5 billion share repurchase plan and inclusion in the Fortune 500 list. The company reported robust loan and deposit growth, driven by successful client acquisition and relationship deepening. Despite facing margin compression concerns and challenges in the Commercial Bank segment, First Citizens is implementing strategies to mitigate these impacts. The company also highlighted significant enhancements to its risk management framework and provided optimistic projections for net interest income, loan accretion, and continued growth in loans and deposits.
Citigroup Inc (C)
Portfolio weight: 6.59%
- EPS: $1.52 reported vs $1.39 estimated
- Revenue: $20.14B reported vs $20.11B estimated
“Our results show the progress we are making in executing our strategy and the benefit of our diversified business model. We achieved positive operating leverage with revenue up 4% and a 2% decline in expenses. Services continued to grow, driven by solid fee growth increased activity in cross border payments and new client onboardings. Markets had a strong finish to the quarter leading to better performance than we had anticipated. Fixed Income was slightly down year-over-year and Equities was up 37%, driven by strong performance in derivatives. Banking was up 38% as the wallet rebound gained some momentum and we again grew share. Wealth is starting to improve. Growth in client investment assets drove stronger investment revenue, and our focus on rationalizing the expense base is starting to pay off. U.S. Personal Banking saw revenue growth of 6%, with all three businesses again contributing to the topline.” – Jane Fraser, CEO
Citigroup reported a net income of $3.2 billion with a 4% revenue increase across all core businesses and a 2% reduction in expenses year-over-year, demonstrating effective strategy execution and cost management. The company announced a dividend increase from $0.53 to $0.56 and plans for modest buybacks, reflecting financial stability and a commitment to shareholder returns. Investments in infrastructure modernization and technology are yielding tangible outcomes, enhancing operational efficiency. Despite facing regulatory penalties totaling $136 million, Citigroup’s strong balance sheet, with a CET1 ratio of 13.6%, and a $1 billion capital return to shareholders underscore its resilience. However, challenges in U.S. personal banking due to credit losses and the need for additional reserves highlight areas of concern.
JPMorgan Chase & Co (JPM)
Portfolio weight: 6.49%
- EPS: $4.40 reported vs $4.27 estimated
- Revenue: $50.99B vs $50.20B estimated
“We now have a CET1 capital ratio of 15.3%, providing us with excess capital even after the uncertainty created by Basel III endgame. Last month, we announced that the Board intends to increase our common dividend for the second time this year, resulting in a 19% cumulative increase compared with the fourth quarter of 2023. This increase is supported by our strong financial performance and represents a sustainable level of dividends. Our priorities remain unchanged. We continue to invest heavily into our businesses for long-term growth and profitability. We maintain a fortress balance sheet and prepare the Firm for a wide range of potential environments.” – Jamie Dimon, CEO
JPMorgan Chase reported a strong financial performance, driven by significant gains from visa shares and a foundation contribution. Investment Banking fees surged by 50% year-on-year, indicating robust growth. The Consumer & Community Banking segment saw record customer acquisition, while the firm announced an increase in the quarterly dividend, reflecting confidence in its financial health. However, there were concerns with higher net charge-offs in the CARD segment and increased expenses due to growth and compensation. The Asset and Wealth Management segment reported long-term net inflows of $52 billion, showcasing strong client trust.
M&T Bank Corp (MTB)
Portfolio weight: 6.45%
- EPS: $3.73 reported vs $3.50 estimated
- Revenue EPS: $2.30B vs $2.27B estimated
“Building on a strong start to the year, the second quarter results reflect a 24% increase in diluted earnings per common share from the first quarter. We continued to grow our commercial and industrial and consumer loan portfolios, while lessening our commercial real estate exposure. Credit metrics improved as both nonaccrual and total criticized loans declined sequentially. Liquidity and capital positions are exceptional, and we are pleased with the reduction in our stress capital buffer that becomes effective later this year. Our team continues to diligently deploy resources while controlling expense growth. We are grateful for our employees’ commitment to our customers and communities which was again on full display in the first half of 2024 through various community events and volunteer engagements throughout our footprint.” – Daryl N. Bible, CFO
M&T Bank reported significant growth and strategic achievements in Q2 2024, including a notable increase in GAAP earnings per share to $3.73 and a 23% rise in net income to $655 million. The bank’s net interest margin improved to 3.59%, reflecting a positive trend in interest income capability. A strategic shift in the loan portfolio composition was highlighted, with a focus on reducing commercial real estate exposure while growing loans. Additionally, the bank has successfully stabilized deposit costs and announced plans to begin share repurchases at $200 million per quarter, underscoring its strong capital position and commitment to shareholder value. M&T Bank’s outlook for 2024 includes managing interest rate impacts with strategic investments, aiming for net interest income between $6.85 billion to $6.9 billion.
Citizens Financial Group Inc (CFG)
Portfolio weight: 6.38%
- EPS: $0.78 reported vs $0.78 estimated
- Revenue: $1.96B vs $1.94B estimated
“We delivered solid performance in the second quarter, featuring strong fee performance across Capital Markets, Wealth and Card, excellent deposit trends, good expense discipline and credit metrics in line with expectations. We are executing well on our strategic initiatives, and highlight that our Private Bank reached $4.0 billion in deposits and $3.6 billion in assets under management. We continue to be comfortable with our full year guidance and medium-term targets.” – Brian Van Saun, CEO
Citizens Financial Group showcased a strong financial performance in the second quarter, highlighted by a robust fee performance driven by capital markets and record card fees, effective deposit cost management, and stable credit metrics. The company also reported significant growth in its private bank, with deposits reaching $4 billion and assets under management at $3.6 billion, indicating successful expansion in wealth management. Additionally, strategic geographic expansion in commercial banking through new hires in Florida and California is expected to enhance market share. However, the company faces credit challenges in its General Office portfolio, expecting a lengthy workout period. Moreover, Citizens Financial Group repurchased $200 million in shares, reflecting strong capital position and confidence in future prospects, alongside providing guidance for Q3 and full year 2024 with expectations of NII down 1-2% and noninterest income slightly up.
Truist Financial Corp (TFC)
Portfolio weight: 6.32%
- EPS: $0.91 reported vs $0.83 estimated
- Revenue: $5.01B reported vs $4.87B estimated
“In the second quarter, we continued to see solid momentum in our core banking businesses as evidenced by strong year-over-year growth in investment banking and trading revenue and continued expense discipline. Client deposits are stabilizing, and asset quality metrics remain within our expectations. While loan demand does remain muted, we are encouraged by an improvement in our dialogue with clients and our expanded capacity to support their needs. We successfully completed the divestiture of our remaining stake in Truist Insurance Holdings, which along with organic capital generation increased our CET1 capital ratio to 11.6% and our tangible book value per share by 34%. We utilized a portion of the capital created from the sale of TIH to reposition our balance sheet, which is expected to replace TIH’s earnings contribution, creates additional liquidity and improves our interest rate risk profile. In addition, our Board authorized the repurchase of up to $5 billion of shares of our common stock through the end of 2026 with repurchases expected to begin during the third quarter. Moreover, the most recent Federal Reserve stress test highlighted our ability to weather a variety of stressed economic scenarios. I am confident in the capabilities of our talented teammates to take Truist to the next level as our strengthened capital position offers us the opportunity to grow our core banking franchise, while also prudently returning capital to our shareholders through our strong dividend and recently announced share repurchase program.” – Bill Rogers, CEO
Truist reported a solid Q2 2024 with an adjusted net income of $1.2 billion, reflecting strong underlying results despite challenges. The company achieved a 3% growth in adjusted revenue, driven by a 4.5% increase in net interest income from balance sheet repositioning, and demonstrated expense discipline with a year-over-year decrease. The sale of Truist Insurance Holdings significantly strengthened the capital position, enabling a $150 million charitable contribution and a $5 billion stock repurchase authorization. However, the company faced a challenging environment with a 0.7% sequential decrease in average loans and a 0.3% decrease in average deposits. Looking ahead, Truist expects revenue to increase 1 to 2% from Q2 2024, with net interest income projected to grow 2 to 3% in Q3.
Wells Fargo & Co (WFC)
Portfolio weight: 6.31%
- EPS: $1.33 reported vs $1.28 estimated
- Revenue: $20.68B reported vs $20.27B estimated
“Our efforts to transform Wells Fargo were reflected in our second quarter financial performance as diluted earnings per common share grew from both the first quarter and a year ago. We continued to see growth in our fee-based revenue offsetting an expected decline in net interest income. The investments we have been making allowed us to take advantage of the market activity in the quarter with strong performance in investment advisory, trading, and investment banking fees. Credit performance was consistent with our expectations, commercial loan demand remained tepid, we saw growth in deposit balances in all of our businesses, and the pace of customers reallocating cash into higher yielding alternatives slowed.” – Charlie Scharf, CEO
Wells Fargo reported strong fee-based revenue growth, driven by investments and favorable market conditions, indicating successful diversification of revenue sources. The company continues to execute on its efficiency initiatives, leading to a decline in headcount for 16 consecutive quarters, and launched two new credit cards, aiming to boost its credit card business. Despite challenges in commercial real estate and a decline in net interest income due to higher funding costs, Wells Fargo announced a 14% increase in its third quarter common stock dividend to $0.40 per share, reflecting strong capital position and commitment to returning capital to shareholders. However, the company faces a challenging outlook for 2024 with expected net interest income in the upper half of the 7-9% lower range and an increased non-interest expense outlook.
Regions Financial Corp (RF)
Portfolio weight: 6.24%
- EPS: $0.52 reported vs $0.48 estimated
- Revenue: $1.78B reported vs $1.76B estimated
“Our teams delivered solid second quarter results driven by the successful execution of Regions’ business strategies. We have a great plan, and the investments we are making in talent, technology, products and services will continue to benefit us as macroeconomic conditions improve.” – John Turner, CEO
Regions Financial Corporation reported strong second quarter earnings with a notable increase in earnings per share to $0.52 and stable revenue of $1.78 billion. Despite a modest decline in fee revenue, the company saw an improvement in asset quality and a decrease in adjusted non-interest expense by 6%. A strategic repositioning of $1 billion in securities aims to maintain liquidity, with net interest income expected to grow towards the upper end of the $4.7 to $4.8 billion range. Additionally, the company declared a quarterly dividend increase and highlighted a strong capital position with a Common Equity Tier 1 ratio of 10.4%.
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*Portfolio weights as at June 28, 2024
Header Image Source: Getty Images Credit: Javier Ghersi
