Treasury

Big banks posted disappointing Q4 earnings

But they’re bullish on consumers’ financial health.
article cover

J Studios/Getty Images

· 3 min read

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.

Judging by earnings calls, the big banks had a rough fourth quarter. Citigroup posted a net loss of $1.8 billion for the quarter, for instance, and its revenue was down 3% year over year. The bank also announced it would lay off 20,000 people, or about 8% of its workforce, over the next two years.

JPMorgan Chase’s net income was down 29% from the previous quarter. Bank of America’s net income dropped more than 50% YoY, from $7.1 billion in Q4 2022 to $3.1 billion, and Wells Fargo’s NII decreased 5% YoY.

But don’t start dusting off those recession predictions just yet: This quarter was an outlier. The four banks, collectively, had to pay fees of nearly $9 billion to the FDIC tied to the collapse of Silicon Valley Bank and Signature Bank. These fees, along with other one-time charges, clouded an otherwise positive quarter.

Without the fees, at least three of the four major banks would have beaten analysts’ estimates for earnings per share (EPS), instead of falling below them, CNN reported. Citigroup’s EPS would have been $0.84, rather than -$1.16; Bank of America’s would have been $0.70, instead of $0.35, and JPMorgan Chase’s would have been $3.97, not $3.04.

And the major banks still had a strong 2023. For the calendar year, the Wall Street Journal reported, the Big Four banks made $104 billion, 11% more than in 2022, including JPMorgan’s record $50 billion.

Wells Fargo, though, saw its NII slip 5% from 2022, “due to lower deposits and loan balances,” according to its earnings report. The bank anticipates NII will fall a further 7%–9% over the course of 2024, owing to such factors as lower interest rates.

Banks view consumers as resilient: In earnings calls, the banks’ executives were upbeat about both the financial health of the American consumer and the economy in general. “The way we see it, the consumer is fine. All of the relevant metrics are now effectively normalized,” JPMorgan Chase CFO Jeremy Barnum said in an earnings call. “A very strong labor market means, all else equal, strong consumer credit.”

“Wage growth has more than offset increased spending,” Wells Fargo CEO Charlie Scharf said. Though the average customer balance is down, he said, it’s still higher than it was before the pandemic.

Some bank leaders now feel a recession is unlikely. “It’s uncontroversial that the economic outlook has evolved to include a significantly higher probability of a soft landing,” Chase’s Barnum said. Bank of America CEO Brian Moynihan agreed that his banks’ analysts saw a “soft landing.” Citi, JPMorgan, and Bank of America all anticipate from three to six interest rate cuts this year.

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.