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Finance/banking

JPMorgan Q1 2024 Earnings: Steady Earnings With Higher Loss Provisions

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Earnings Season Q1-2024 Big Banks

JP Morgan (JPM)

JPMorgan Chase non-GAAP EPS of $4.63 beats by $0.50, revenue of $41.93B (Up 9.5% YoY) beats by $240M

Q1 -24 Net Interest Income, NII declined 4% sequentially as expected, due to deposit margin compression.

Full Year Net Interest Income, NII guidance is unchanged at $90Bn

Adjusted expenses guidance is $1Bn higher at $91Bn V $90Bn for the year.

The bank card services net charge-off rate is projected to be less than 3.50% vs. its previous guidance of 3.50% – this is a relief, but JPM has a tendency to over provide, so not much of a surprise. Similarly, overall Provision for credit losses was lower at $1.88B, vs. consensus of $2.74B and compared with $2.76B in Q4 and $2.28B in Q1 2023. 

The stock is down 2% premarket, the higher adjusted expense guidance seems to be the main culprit.

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Insurance Stocks

Globe Life (GL): Navigating Short Selling Allegations and Market Volatility

Globe Life (GL) $53

Category – Financial Services – subcategory- insurance

There is a short-selling operation going on by Orso Partners, alleging insurance fraud and of course the usual denials, and the short covering, which caused the 10% bounce premarket.

https://www.cnbc.com/2024/04/11/globe-life-shares-plummet-50percent-after-short-seller-accuses-company-of-insurance-fraud.html

Historically, though higher mortality rates, mostly pandemic related, was one of the main reasons for the drop in 2022 income.

While the balance sheet is relatively OK, debt levels are elevated, which is not ideal in a high-interest rate environment. 

There is a lot depending on declining or increasing mortality rates, and this could cause a lot of volatility in its stock.

That said, the company and analyst estimates are calling for 8% earnings growth in the next 3 years, and if the fraud claims are bogus and just short seller manipulation, the valuation is quite good. It has been a profitable company in the last 5-7 years.

But without enough information on the validity of Orso’s fraud claim it would be difficult to make a call. 

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Finance/banking

Citi Q1 2024 Beats Earnings Estimates

Earnings Season Q1-2024 Big Banks

*Citigroup (NYSE:C): $61.50*

Beats on both earnings and revenues —Q1 GAAP EPS of $1.58 beats by $0.41.

Revenue of $21.1B (-1.6% Y/Y) beats by $700M.

Citi had higher credit card losses but is providing a lower allowance for Q2. – cost of credit was approximately $2.4 billion in the first quarter 2024, compared to $2.0 billion in the prior-year period, primarily driven by higher card net credit losses, partially offset by a lower allowance for credit losses build.

The stock is up 1.5% pre-market.

Wells Fargo Q1 2024 Earnings: A Mixed Bag Amidst Stable Credit Quality

source

Earnings Season Q1-2024 Big Banks

There were no major surprises from the three big banks, JOM, Citi, and Wells Fargo. Credit loss provisions were in line, slightly lower, so that’s a positive, but nothing consequential on earnings/revenue.

Wells Fargo (WFC) $56.50

Wells Fargo Q1 earnings topped Wall Street’s consensus and credit quality remained healthy. Its provision for credit losses came in significantly below the analyst estimate.

Guidance for Q2 remained the same – it still expects net interest income to decline 7%-9% from 2023’s $52.4B. Its 2024 guidance for noninterest expense at ~$52.6B also remained unchanged.

Q1 EPS of $1.20 vs. $0.86 in Q4 2023 and $1.23 in Q1 2023. Excluding $284M, or $0.06 per share, of additional expense for its FDIC special assessment, Q1 2024 earnings would have been $1.26 per share, topping the $1.09 average analyst estimate.

Total revenue of $20.9B, beating the $20.2B consensus, increased from $20.5B in the previous quarter and $20.7B a year ago.

Provision for credit losses was $938M, vs. the $1.34B consensus, falling from $1.28B in Q4 and $1.21B in Q1 2023.

Net interest income of $12.2B, lagging the $12.3B Visible Alpha estimate, dropped from $12.8B in the prior quarter and $13.3B a year ago.

Net loan charge-off, as a percentage of average total loans, was 0.50% vs. 0.53% in Q4 and 0.26% in Q1 2023.

Lower credit losses and provisioning are positive, there’s nothing to write home about on revenue and EPS, which remain tepid.

Categories
Insurance

Globe Life (GL): Navigating Short Selling Allegations and Market Volatility

Globe Life (GL) $53

There is a short selling operation going on by Orso Partners, who’re alleging insurance fraud and of course the usual denials, and the short covering, which caused the 10% bounce premarket.

https://www.cnbc.com/2024/04/11/globe-life-shares-plummet-50percent-after-short-seller-accuses-company-of-insurance-fraud.html

Historically, though higher mortality rates, mostly pandemic related, was one of the main reasons for the drop in 2022 income.

While the balance sheet is relatively OK, debt levels are elevated, which, in a high-interest rate environment, is not ideal. 

There is a lot depending on declining or increasing mortality rates, and this could cause a lot of volatility in its stock.

That said, the company and analyst estimates are calling for 8% earnings growth in the next 3 years, and if the fraud claims are bogus and just short seller manipulation, the valuation is quite good. It has been a profitable company in the last 5-7 years.

But without enough information on the validity of Orso’s fraud’s claim it would be difficult to make a call.