Banking & Finance

Can Citigroup, JPMorgan, Wells Fargo Put a Tough Year Behind Them?

Earnings season for the quarter that ended in December hits the ground running this Friday with quarterly and full-year results from three of the nation’s biggest banks and the nation’s third-largest regional bank.

For the most part, banks had a tough 2020. Interest income was down and only partially offset by improvements in other parts of the banking business, particularly higher revenue from their trading desks. The arrival of vaccines against COVID-19 is expected to help banks as consumers once again feel safe to visit stores, take vacations and generally spend more money.

Shares of Citigroup Inc. (NYSE: C) fell nearly by nearly 20% in 2020. But it could have been a lot worse. On October 28, shares traded down by just over 47%. When the bank reports fourth-quarter and full-year results before markets open on Friday, analysts are estimating that earnings per share (EPS) will fall by more than a third year over year to $1.34 for the quarter and by 47% to $4.25 for the full year. Revenue is expected to drop by around 9% to $16.7 billion in the quarter and increase by a scant 0.2% for the full year.

Around noon on Wednesday, Citi’s stock traded at $66.36, down about 0.5% for the day in a 52-week range of $32.00 to $82.13. The stock’s consensus price target is $76.35, and the bank pays an annual dividend of $2.04 (yield of 3.06%).

JPMorgan Chase & Co. (NYSE: JPM) saw its shares lose about 5.5% last year. However, in late September, the shares were down about 32%. For the first several trading days of 2021, the bank’s shares are up more than 10%. It is expected to report fourth-quarter EPS of $2.62, a year-over-year improvement of about 2%, and full-year EPS of $7.73, a year-over-year drop of 28%. Quarterly revenue is projected to be down by 2% to $28.63 billion, and full-year revenue is forecast to improve by 1.3% to $120.28 billion.

JPMorgan’s shares traded down about 1.3% Wednesday morning, at $138.36 in a 52-week range of $76.91 to $141.66. The stock’s consensus price target is $139.29, and the bank pays an annual dividend of $3.60 (yield of 2.57%).

Wells Fargo & Co. (NYSE: WFC) stock tumbled by nearly 42% in 2020 but has recovered to post a gain of 12% so far in 2021. In late October, the stock traded down nearly 59%. Before markets open on Friday, Wells Fargo is expected to report EPS of $0.59 for the fourth quarter and $0.33 for the full year. The quarterly total is just a penny less than the same quarter of 2019, but the annual EPS total is down 92%, from $4.05 in 2019. Fourth-quarter revenue is forecast at $18.1 billion, down 8.8% year over year, and full-year revenue is expected to reach $72.47 billion, a drop of 14.8% compared to 2019.

Shares traded at $33.69 on Wednesday, in a 52-week range of $20.76 to $49.88. The stock’s consensus price target is $36.10, and Wells Fargo pays an annual dividend of $0.40 (yield of 1.18%).

PNC Financial Services Group Inc. (NYSE: PNC) is among the nation’s top regional banks based on market cap, and it could move into second place once its acquisition of most of BBVA’s U.S. assets is completed later this year. The bank’s share price dropped about 2.8% in 2020 but has added some 6.4% in the first days of 2021. When PNC reports results before the opening bell on Friday, analysts are looking for quarterly EPS of $2.61, down 12% year over year, and full-year EPS of $16.26, a jump of nearly 43% compared to 2019 results. Revenue is forecast to reach $4.14 billion in the quarter, a drop of more than 10%, and full-year revenue is forecast to decline by 5.8% to around $16.8 billion.