How Citi and Wells Fargo performed for the quarter ended March 2023?

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Citi, Wells Fargo Q1 earnings

The first quarter (January - March) earnings season for the US equity markets began with impressive results from top US banking names including investment banking major Citi Group and retail banker Wells Fargo, helped by strong loan growth, and impressive interest margins.

Citi’s and Wells Fargo’s results follow strong results from JP Morgan which saw its net profits jump 52% to $ 12.6 billion! Let’s check how Citi and Wells Fargo have performed? 

Citi Q1 Results: Key Highlights

  • Citigroup beat Wall Street's first-quarter earnings expectations led by a jump in interest rates by the US central bank.
  • Citi's net interest income increased by 23% to $13.3 billion, and the company allocated $241 million towards potential loan losses, up from $138 million in the previous year.
  • Citi expects more clients to fall behind on payments in the coming quarters over bets that a mild recession might be looming over the US economy. 

Wells Fargo Q1 Results: Key Highlights

  • Higher interest rates from the US central bank also pushed first quarter net interest income and profits higher by 45% and 36% respectively for the bank.
  • The bank reported a $643 million increase in the allowance for credit losses
  • Wells Fargo deposits fell 2% to $1.36 trillion at the end of March, compared with $1.38 trillion at the end of last year.

Citi share price: Historical Performance

Citibank share price gained about 4% during the quarter ended and have risen about 10% so far this year. Banking stocks have been under constant pressure over the past month ever since a host of local banking names in the US were shut down due to poor asset-liability management. 

The fallout of banks like Silicon Valley Bank, First Republic Bank and more have pushed investors slightly away from the otherwise in-demand banking sector. 

Wells Fargo share price: Historical Performance

Alternatively, Wells Fargo shares fell 10% during the January to March period and slipped 4% in 2023 so far. Similar risks surrounding the recent fallout of several retail banks in the US led to its decline. Wells Fargo paid about $5 billion to help revive peer First Republic Bank during the quarter. 

Citi Revenue:

Revenue from operations rose about 12% to $21.4 billion, primarily due to strong net interest incomes and a jump in loan advances.  

Q1FY23Q1FY22YoY change
$21.4 billion$19.1 billion12%

Citi Net Profit:

The  bank’s net profit  jumped 7% to $4.6 billion. Citi earned $1.86 per share in the first quarter, beating analysts' average estimate of $1.67, according to data provided by Refintiv. 

Q1FY23Q1FY22YoY change
$4.6 billion$4.3 billion7%

Wells Fargo Revenue:

Wells Fargo revenue rose 17% over the corresponding quarter in the previous year, tracking a healthy rise in the bank’s net interest income, pushed higher by a strong rise in loans. Average loans in the bank's commercial banking division rose 15%, while commercial loans rose roughly 7% from a year earlier.

Q1FY23Q1FY22YoY change
$20.7 billion$17.7 billion17%

Wells Fargo Net Profit:

The bank’s net profit soared 30%, due over rising income from loans and lower spends on deposit interests paid. However, the bank set aside $1.21 billion in the quarter as a safety net for potential credit losses, compared to $787 million a year earlier.

Q1FY23Q1FY22YoY change
$4.9 billion$3.8 billion30%

Citi Q1 Results: Analyst View

  • Piper Sandler has a ‘neutral’ rating on the stock and a $53 share price target.
  • Credit Suisse has a ‘neutral’ rating on the stock and a $54 share price target.
  • Société General has a ‘buy’ rating on the stock and a $53 share price target.

Wells Fargo Q1: Analyst View

  • Raymond James has a ‘strong buy’ rating on the stock and a $48 share price target.
  • Piper Sandler has a ‘neutral’ rating on the stock and a $41 share price target.
  • Credit Suisse has an ‘outperform’ rating on the stock and a $53 share price target.

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.