Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Citigroup (NYSE:C) and the best and worst performers in the diversified banks industry.
At their core, diversified banks take in deposits and engage in various forms of lending, which means revenue is generated through interest rate spreads (difference between loan and deposit rates) and fees. Other revenue comes from adjacent services such as wealth management, card and account fees, and products such as annuities. These institutions benefit from rising interest rates that improve NIMs (net interest margins), digital transformation reducing operational costs, and expanding wealth management services as populations age. However, they face headwinds including fintech competition disrupting traditional models (how disruptive is crypto?), stringent regulatory requirements increasing compliance costs, and cybersecurity threats requiring substantial technology investments. Economic downturns also pose risks through potential loan defaults and compressed margins during accommodative monetary policy periods.
The 7 diversified banks stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1.1%.
While some diversified banks stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.5% since the latest earnings results.
Best Q2: Citigroup (NYSE:C)
With operations in nearly 160 countries and a history dating back to 1812, Citigroup (NYSE:C) is a global financial services company that provides banking, investment, wealth management, and payment solutions to consumers, corporations, and governments.
Citigroup reported revenues of $21.67 billion, up 8.2% year on year. This print exceeded analysts’ expectations by 3.5%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ EPS estimates and a solid beat of analysts’ net interest income estimates.
Citigroup pulled off the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 4.6% since reporting and currently trades at $91.50.
Is now the time to buy Citigroup? Access our full analysis of the earnings results here, it’s free.
PNC Financial Services Group (NYSE:PNC)
Tracing its roots back to 1852 when Pittsburgh's industrial boom demanded stronger financial institutions, PNC (NYSE:PNC) is a diversified financial institution that provides retail banking, corporate banking, and asset management services through a coast-to-coast branch network.
PNC Financial Services Group reported revenues of $5.66 billion, up 4.6% year on year, outperforming analysts’ expectations by 1.3%. The business had a strong quarter with a solid beat of analysts’ tangible book value per share estimates and a decent beat of analysts’ EPS estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 1.5% since reporting. It currently trades at $189.28.
Is now the time to buy PNC Financial Services Group? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: U.S. Bancorp (NYSE:USB)
With roots dating back to 1863 and a presence across 26 states primarily in the Midwest and West, U.S. Bancorp (NYSE:USB) is one of America's largest banks providing lending, deposit services, wealth management, payment processing, and merchant services to individuals and businesses.
U.S. Bancorp reported revenues of $6.98 billion, up 2% year on year, falling short of analysts’ expectations by 0.7%. It was a slower quarter as it posted a miss of analysts’ net interest income estimates and a miss of analysts’ tangible book value per share estimates.
U.S. Bancorp delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 2.8% since the results and currently trades at $44.40.
Read our full analysis of U.S. Bancorp’s results here.
Truist Financial (NYSE:TFC)
Born from the 2019 merger of BB&T and SunTrust in one of the largest banking combinations since the 2008 financial crisis, Truist Financial (NYSE:TFC) is a bank holding company that offers a wide range of financial services including consumer and commercial banking, wealth management, insurance, and lending solutions.
Truist Financial reported revenues of $4.99 billion, up 396% year on year. This number met analysts’ expectations. Zooming out, it was a slower quarter as it produced a miss of analysts’ EPS estimates and net interest income in line with analysts’ estimates.
Truist Financial achieved the fastest revenue growth among its peers. The stock is down 3.6% since reporting and currently trades at $43.45.
Read our full, actionable report on Truist Financial here, it’s free.
JPMorgan Chase (NYSE:JPM)
Tracing its roots back to 1799 when its earliest predecessor was founded by Aaron Burr, JPMorgan Chase (NYSE:JPM) is a leading financial services company offering investment banking, consumer banking, commercial banking, and asset management services globally.
JPMorgan Chase reported revenues of $44.91 billion, down 10.5% year on year. This print surpassed analysts’ expectations by 2.9%. Zooming out, it was a satisfactory quarter as it also produced a decent beat of analysts’ EPS estimates but a miss of analysts’ net interest income estimates.
JPMorgan Chase had the slowest revenue growth among its peers. The stock is flat since reporting and currently trades at $291.37.
Read our full, actionable report on JPMorgan Chase here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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