US Bank Results: How did key US Banks perform in the September quarter? Check Highlights

Leading banks in the US reported their quarterly earnings on Friday. They made clear that the Federal Reserve's hawkish policy could cost them in the longer term, increasing provisions for potential credit losses. Let me look at their quarterly numbers. 

JPMorgan Third quarter results

JPMorgan Q3 earnings decline: The bank reported its third-quarter profit fell by 17% to $9.74 billion or $3.12 a share from the year-ago period. The profit is higher than analysts' estimate of $2.88 per share. 

JPMorgan Q3 results revenue jumped: The revenue for JPMorgan jumped 10% to $33.49 billion in the September quarter, helped by higher interest rates from the Fed to battle inflation. 

JPMorgan quarterly results Net Interest Income: The bank posted 34% growth in its net interest income to $17.6 billion on the back of expanding its loan book and higher rates. NII is 600 million higher than analysts' expectations.

Chief Executive Jamie Dimon highlighted potential risks for the bank. He also added that the American consumers had kept up spending and businesses remained healthy. He flagged the uncertain impacts of quantitative tightening, stubbornly high inflation leading to rising global interest rates, the war in Ukraine and the fragile state of oil supply and prices as near-term headwinds.

Citigroup's third-quarter results

Citigroup Q3 earnings decline: Citigroup reported that its third-quarter earnings fell by 25% as it bulked up its credit loss provisions and investment banking slumped. The profit declined in part from an increase in loan loss reserves. The net income reported by the bank was $3.5 billion or $1.63 per diluted share. Last year, in the third quarter, the bank reported a net income of $4.6 billion or $2.15 per share.

Citigroup Q3 Results revenue increase: The revenue increased to $18.51 billion in the third quarter compared to the $18.25 billion expected by analysts. The revenue was up 6% from $17.4 billion in the same quarter last year. The revenue was up due to the gain on sale of the Philippines consumer business versus a loss on sale of the Australia consumer business in the prior-year period.

Citigroup Personal banking: The segment was a bright spot for the bank as revenue rose to $4.33 billion, a growth of 10% on-year. It reflected growing net interest income as interest rates climbed.

Citi CEO Jane Fraser has said that given the strength of the bank's balance sheet, capital levels and liquidity, the bank is well positioned to help its clients navigate very challenging markets and slower growth.

Morgan Stanley September quarter results

Morgan Stanley posted its third-quarter results, and numbers were below analysts' expectations. The biggest surprise was in the revenue from the investment banking vertical.

Morgan Stanley Q3 earnings fall: The bank reported a net profit of $2.63 billion or $1.47 a share, a decline of 29% from a year earlier. Analysts had earlier estimated earnings per share of $1.49.

Morgan Stanley Q3 results revenue slump: The revenue declined by 12% to $12.99 billion against an estimate of $13.3 billion. The major decline came from investment banking revenue as it fell 55% to $1.28 billion in the September quarter. Investment management revenue also dropped 20% to $1.17 billion, below the $1.29 billion estimate.

Morgan Stanley's Investment Banking and Investment Management verticals were impacted by the market environment, Fixed Income and Equity navigated challenging markets well. The bank continues to maintain a strong capital position while repurchasing $2.6 billion of shares and distributing a healthy dividend.

Wells Fargo Quarterly results

Wells Fargo Q3 earnings decline: The bank reported a decline in its net income for the quarter ending September. The net income fell more than 30% and stood at $3.53 billion on 85 cents per share. In the year-ago period, the net income was $5.12 or $1.17 per share. Bank's profit was significantly hurt by operating losses of $2 billion, or 45 cents per share, related to customer remediation, litigation, and regulatory matters.

Wells Fargo quarterly results strong revenue: Wells Fargo reported revenue of $19.51 billion against a street estimate of $18.78 billion. The bank's home lending revenue fell 52% in the third quarter as the pace of mortgage origination slowed. The revenue jump was supported by a 28% jump in banking on the bank of stronger treasury management results.

Wells Fargo Net interest income: It increased by 36%, primarily due to the impact of higher interest rates and higher loan balances.

"Our top priority remains strengthening our risk and control infrastructure which includes addressing open historical issues and issues that are identified as we advance this work," Wells Fargo CEO Charlie Scharf said in a statement.

Prospects for the banks

Banks have used the quarter to set aside additional funds to cover potential credit losses. Also, they struck an upbeat tone on their ability to weather any downturn. One of the important questions for investors to take note of is whether the banks will continue to enjoy favorable deposit betas. It is a measure of how much of the rise in interest rates the bank expects it will pass on to customers with interest-bearing accounts.