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Wells Fargo’s Earnings Likely to Underperform Peers in 2H17

Robert Karr - Author
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Aug. 18 2020, Updated 5:13 a.m. ET

3Q17 performance

Commercial banks (XLF) could see a marginal improvement in growth for 3Q17 mainly due to a rebound in trading activity due to reduced geopolitical tensions and improving fundamentals. However, the quarter could be marked by lower credit offtake, partially offset by higher rates. Banks could continue to see new inflows in asset management and a rise in investment banking fees.

Wells Fargo (WFC) is expected to post EPS of $1.04 and $1.06 in 3Q17 and 4Q17, respectively. The bank is expected to post revenue growth of 0.5% to ~$22.4 billion, helped by higher rates. For fiscal 2017, the bank is expected to post revenues of ~$89.6 billion, which would represent growth of 1.5%.

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Who is outperforming WFC?

Bank of America (BAC) is expected to post EPS of $0.47 in 3Q17 and $0.48 in 4Q17, which would indicate sequential as well as YoY growth mainly due to a rebound in trading, credit offtake, and higher rates. BAC is expected to see revenues of ~$22.0 billion in 3Q17, which would represent growth of 0.8% on a YoY (year-over-year) basis.

JPMorgan Chase (JPM) is expected to see per share earnings of $1.67 in 3Q17 and $1.69 in 4Q17, reflecting a sequential decline largely due to lower trading activity, and subdued credit offtake partially offset by new flows. The banking giant is expected to see revenues of ~$25.4 billion, which would represent a fall of 0.4%.

Citigroup (C) is expected to post EPS of $1.29 in 3Q17 and 4Q17. These earnings would reflect a sequential as well as a year-over-year rise due to advances, trading, and higher rates partially offset by regulatory costs.

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