America’s biggest banks delivered a strong start to the first-quarter earnings season last week, with JPMorgan Chase and Bank of America both beating analyst expectations on revenue and profit, though the backdrop of an ongoing conflict with Iran and elevated oil prices ensured that optimism among executives remained measured rather than effusive.
JPMorgan reported net income of $16.49 billion for the quarter, representing a 13% increase compared to the same period last year and comfortably beating the LSEG consensus estimate of $5.45 per share with actual earnings of $5.94. Revenue came in at $50.54 billion, a 10% year-on-year increase, driven by fixed income trading revenue that rose 21% to $7.08 billion and investment banking fees that jumped 28% to $2.88 billion as mergers activity and stock underwriting recovered from the lows seen earlier in the year.
CEO Jamie Dimon, who has a long track record of tempering financial success with macro candour, used the results call to flag what he described as an increasingly complex set of risks facing the global economy.
“The US economy remained resilient in the quarter, with consumers still earning and spending and businesses still healthy,” he said, before adding that geopolitical tensions, energy price volatility, large global fiscal deficits, and elevated asset prices all represented meaningful uncertainties. JPMorgan lowered its full-year net interest income forecast to approximately $103 billion, a downward revision that weighed on the share price despite the headline earnings beat.
Bank of America’s numbers were comparably strong. Net income for the first quarter reached $8.6 billion, or $1.11 per share, against a consensus estimate of $1.01 per share, representing the bank’s strongest earnings per share figure in roughly twenty years.
Revenue of $30.43 billion was up 7.2% year-on-year, supported by net interest income that grew 9% to $15.7 billion and an equities trading desk that posted its strongest quarter on record with revenue rising 30% to $2.83 billion. CEO Brian Moynihan maintained a constructive tone on the domestic economy, saying the bank saw signs of a resilient American consumer.
The contrast between the two banks’ guidance was notable. While JPMorgan cut its full-year NII forecast, Bank of America raised its equivalent projection to 6-8% growth, a more optimistic reading of the domestic interest rate and lending environment that markets rewarded with a modest share price gain. Goldman Sachs also delivered a 19% profit increase on the back of a record equities trading quarter, completing a picture of broad strength across the major trading and investment banking divisions.
Wells Fargo was the weakest performer in the group, missing both revenue and net interest income estimates, with investors penalising the bank for the spread pressure that continues to weigh on its more traditional lending-focused Business model. The market’s pattern of rewarding fee income and trading revenue while punishing spread compression reflects a broader theme in the current rate environment and is likely to shape how bank stocks trade through the remainder of the year.
The earnings context is set against a wider Wall Street rally driven by hopes that the US-Iran war is approaching a diplomatic resolution. The S&P 500 closed above 7,000 for the first time in its history last week, with the index up more than 10% from its correction lows in late March.
Analysts at Yardeni Research are maintaining a year-end target of 7,700, arguing that the market has learned to look through the conflict and focus on earnings fundamentals rather than geopolitical noise.