First quarter earnings from the big banks are out, and the results, while mixed, were overall positive. The consensus view coming out of the Q1 prints is that the big U.S. banks are in good shape after two difficult years. The large investment banks are seeing their financial results improve as deals return to Wall Street. Initial public offerings (IPO), in particular, have rebounded after slowing to a trickle during the 2022 bear market. Revenue from trading activity also picked up during the first quarter with stock markets hovering at all-time highs.
The large commercial lenders are also performing well as retail-banking units remain strong with consumers continuing to spend at a healthy pace, including on their credit cards. Additionally, all the big banks set aside less money in Q1 of this year to cover potentially bad loans, which gave their earnings a boost. With the economy showing resilience and talk of a recession having faded, the outlook for banks remains very positive. Here are the three best bank stocks to buy on Q1 earnings results.
JPMorgan Chase (JPM)
JPMorgan Chase’s (NYSE:JPM) first quarter 2024 financial results beat Wall Street forecasts across the board. The stock fell on downbeat forward guidance, but the Q1 print itself was very strong. The world’s largest lender reported earnings per share (EPS) of $4.44 compared to $4.11 that was expected among analysts. JPMorgan earned $42.55 billion in revenue, exceeding Wall Street expectations of $41.85 billion. The bank’s sales were up 8% from a year earlier.
JPMorgan posted a $1.88 billion provision for credit losses in Q1. That was well below the $2.7 billion that analysts had anticipated. Trading revenue at the bank was down 5% from a year earlier. However, fixed income and equities results topped analysts’ expectations by more than $100 million each, coming in at $5.3 billion and $2.7 billion respectively. As he often does, JPMorgan Chase CEO Jamie Dimon gave a downbeat outlook for the economy and interest rates during his earnings call with analysts and media.
Regardless of the economic outlook, JPMorgan Chase continues to fire on all cylinders. JPM stock has increased 30% over the last 12 months.
Goldman Sachs (GS)
Goldman Sachs (NYSE:GS) arguably had the best first quarter print among the major U.S. banks. The investment bank beat analysts’ forecasts as its trading and investment banking revenue bounced back during the January through March quarter. Goldman reported Q1 EPS of $11.58 compared to $8.56 that was the consensus expectation of analysts. Revenue totaled $14.21 billion versus $12.92 billion that had been forecast. Profits at the bank increased 28% from a year earlier.
Goldman Sachs said its Q1 print got a lift from a recovery in investment banking activities that include IPOs and mergers and acquisitions (M&A). Since last fall, there have been several high-profile IPOs from companies such as Birkenstock (NYSE:BIRK) and Astera Labs (NASDAQ:ALAB). The strong first quarter marked a reversal for Goldman Sachs, whose financial performance suffered over the last 18 months as Wall Street deals declined amid a bear market and high interest rates.
GS stock is up nearly 20% over the past 12 months.
Wells Fargo (WFC)
Wells Fargo (NYSE:WFC) also had an impressive first quarter earnings report, announcing its profit rose 14% from a year earlier. The full service lender reported EPS of $1.26 compared to $1.11 that was forecast among analysts. Revenue totaled $20.86 billion versus $20.20 billion that was expected on Wall Street. Q1 net interest income, a key measure of bank earnings from loans, fell 8% due to higher interest rate impacts.
During Q1, Wells Fargo set aside $938 million as provisions for credit losses. The bank said the provision included a decrease in the allowance for credit losses that was driven by real estate and motor vehicle loans. The bank also disclosed that it repurchased $6.1 billion of its own common stock during the quarter. Analysts and investors received the earnings print positively, sending WFC stock higher. In the last year, Wells Fargo’s share price has gained 38%.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.