Entering the third year of high-interest rate environment, the prospects of the large commercial banks in the United States are still facing headwinds. Fortunately, the recent slowdown in economic data points to a more optimistic rate cut expectation, which is expected to pave the way for a soft landing of the US economy and end the pain faced by the banking industry.

On Friday, July 12th,$JPMorgan (JPM.US)$,$Wells Fargo & Co (WFC.US)$,$Citigroup (C.US)$large commercial banks successively announced their performance, marking the start of the Q2 earnings season for US stocks.

J.P. Morgan's investment banking business rebounded significantly, with net income hitting a record high.

J.P. Morgan, the largest commercial bank in the United States, reported second-quarter revenue ahead of analysts' expectations in pre-market trading, and more importantly, investment banking revenue jumped 50% year-on-year, indicating that trading activities have rebounded somewhat.

The financial report indicates that JPMorgan's Q2 revenue was $50.99 billion, exceeding market expectations of $49.87 billion. Net interest income was $22.7 billion, with a 4% increase. However, it was slightly lower than expected. Earnings per share were $4.40, exceeding market expectations of $4.19. Net income was $18.1 billion, a year-on-year increase of 25%, better than expected by analysts and a historical high.

During the quarter, JPMorgan received $2.3 billion in investment banking fee income, about $0.3 billion more than StreetAccount's expectations, and stock trading revenue exceeded expectations, rising to nearly $3 billion, showing that Wall Street trading activities have recovered somewhat.

CEO Jamie Dimon said in the financial report that his company is cautious about potential future risks, including higher-than-expected inflation and interest rates, although stock and bond valuations “reflect fairly benign economic prospects.”

Dimon said:

“The geopolitics are still complicated and may be the most dangerous since World War II, although it is still unknown what the results and impacts on the global economy will be... Some progress has been made in reducing inflation, but there are still multiple inflation factors in front of us: huge fiscal deficits, infrastructure demands, trade structural adjustments, and global remilitarization.”

At the time of writing, JPMorgan fell 0.17% pre-market, previously falling nearly 2%.

Wells Fargo & Co. has Q2 net interest income lower and net charge-offs higher than expected.

Although the profits and revenues of Wells Fargo & Co. in Q2 exceeded Wall Street's expectations, the bank's net interest income announced on Friday declined by 9%.

The financial report shows that the Q2 revenue of Wells Fargo & Co. was $20.69 billion, exceeding market expectations of $20.29 billion. Earnings per share were $1.33, exceeding market expectations of $1.29. Q2 net profit fell from $4.94 billion in the same period last year to $4.91 billion. Net charge-offs surged 70.5% to $1.303 billion, higher than market expectations of $1.24 billion.

Net interest income for the quarter was $11.92 billion, down 9% year-on-year and lower than analysts' expected $12.12 billion. Net interest income is a key indicator for measuring bank lending income. Wells Fargo & Co. explained that the decline in net interest income was due to the impact of rising interest rates on financing costs.

CEO Charlie Scharf said in the financial report:

“We continue to see revenue growth based on costs, which offsets the expected decline in net interest income... The investments we have been making have enabled us to take advantage of market activity this quarter and achieve strong performance in investment consulting, trading and investment banking fees.”

The bank repurchased more than $12 billion in common stock in the first half of 2024 and expects a 14% increase in third-quarter dividends.

At the time of writing, Wells Fargo & Co fell more than 5% pre-market.

Citigroup's restructuring has shown initial results, with pre-market stock prices rising by 3%.

Citigroup's financial report released on Friday showed a decline in Q2 net interest income, which was lower than analysts' expectations.

According to the financial report, Citigroup's Q2 revenue was $20.113 billion, a year-on-year increase of 4%, slightly higher than the market's expected $20.107 billion. The net income for the quarter was $3.2 billion, with an EPS of $1.52, higher than the market's expected $1.39. The net interest income for the quarter was $13.49 billion, a year-on-year decrease of 3%, slightly lower than the analysts' expected $13.5 billion.

However, Citigroup's banking business saw significant growth, with a YoY revenue increase of 38%. The stock trading revenue also saw a YoY increase of 37%, benefiting from a healthy derivatives market.

In terms of assets, Citigroup is the third largest bank in the United States. Last year, Citigroup CEO Jane Fraser announced plans to simplify the management structure and reduce costs. The bank announced the completion of a large-scale restructuring in the first quarter of this year, with Q2 operational expenses down by 2% YoY. The total expenses for the three months ending June 30th were $13.4 billion.

Fraser stated in the financial report,

"The results show the progress we have made in executing our strategy and the benefits of our diversified business model. We have made incredible progress in simplification both strategically and organizationally."

So far, the market has had mixed reactions to Citigroup's restructuring, but the effectiveness of the restructuring has already been recognized by legendary investor and stock god Warren Buffett.

At the time of writing, Citigroup's pre-market price rose by 2.24%, previously rising by more than 3% at one point.

Edited by Jeffrey