How Citi Earnings Will Impact Goldman Sachs, J.P. Morgan and BofA

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After backing out the $3.8 billion in charges for settling its dispute with the U.S. Department of Justice, Citigroup Inc. (NYSE: C) reported better-than-expected second-quarter results Monday morning. The bank reported adjusted diluted earnings per share (EPS) of $1.24 on revenue of $19.3 billion. Second-quarter results compare to the consensus estimates for EPS of $1.05 on revenue of $18.93 billion.

Second-quarter revenues declined 6% year-over-year as a result of weakness in both fixed-income revenues and lower U.S. mortgage financing. Net income — excluding the $3.8 billion in charges — increased to $3.9 billion, up 1% year-over-year. Again excluding the settlement charge, expenses were lower by 3% this year.

At Goldman Sachs Group Inc. (NYSE: GS), which reports second-quarter results Tuesday morning, shares traded higher Monday morning thanks to Citi’s report. Outside of earnings, the emphasis at Goldman is on compensation costs, trading revenue/earnings and investment banking. Estimates are $3.05 per share earnings and $7.97 billion in revenue. Last year Goldman posted EPS of $3.70 on revenues of $8.61 billion. Goldman’s stock price performance so far in 2014 is down nearly 7%.

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JPMorgan Chase & Co. (NYSE: JPM) is also scheduled to report results Tuesday morning and estimates call for EPS of $1.29 on revenues of $23.76 billion. Last year the bank reported second-quarter EPS of $1.60 on revenues of $25.96 billion. J.P. Morgan may still face more U.S. Department of Justice and regulatory settlements, so there may be an impact here as well as some commentary from the bank. We might even get an update on recent news about CEO Jamie Dimon’s throat cancer. J.P. Morgan’s stock is down about 4% year to date.

Because Bank of America Corp. (NYSE: BAC) is no longer included among the Dow 30 stocks, its importance has diminished. But Citi’s solid earnings report should also give BofA a boost. The EPS estimate is $0.29, on revenues of $21.62 billion. In the second quarter of 2013 the bank posted EPS of $0.32 on revenues of $22.73 billion. Year to date, the stock is down about 4.5%.

Revenue at all the big banks was expected to be lower than in the same period a year ago, and Citi reported a drop of 6%. The other three banks are looking at revenue declines of around 4% to 8%. Wells Fargo & Co. (NYSE: WFC), which reported results last Friday, posted revenues that were about 4% below the second quarter of last year.

Goldman’s shares traded higher by about 1.2% Monday morning, at $166.74 in a 52-week range of $151.33 to $181.13.

J.P. Morgan shares were up about 1.3%, at $56.55 in a 52-week range of $50.06 to $61.48.

Bank of America traded up about 1.6%, at $15.61 in a 52-week range of $13.60 to $18.03.

ALSO READ: Citigroup Settlement With Justice Department Slashes Earnings