U.S. banks delivered another round of strong fourth-quarter earnings Thursday, with Morgan Stanley MS, Bank of America Corp. BAC, U.S. Bancorp USB, First Horizon Corp. FHN, and PNC Financial Services Group Inc. PNC all surpassing Wall Street earnings estimates.
The results reinforced the sector’s resilience, yet financial stocks showed a mixed reaction after Wednesday’s sharp rally.
The Financial Select Sector SPDR Fund XLF, which tracks major banks, inched up 0.1% Thursday after a 2.6% gain the previous day. Meanwhile, regional banks, tracked by the SPDR S&P Regional Banking ETF KRE, dipped 0.7% following Wednesday’s rally.
The reports followed upbeat earnings from Goldman Sachs Group Inc. GS, JPMorgan Chase & Co. JPM, Citigroup Inc. C, Wells Fargo & Co. WFC, and Bank of New York Mellon Corp. BK, which fueled the biggest one-day surge in financial stocks since November.
Market strategist Ed Yardeni said the earnings reflected a “pickup in investment banking and markets activity as business confidence improved.” He added that consumer loan growth remained slightly stronger than commercial loan growth.
Morgan Stanley Rides Trading Boom To Blowout Quarter
Morgan Stanley posted earnings per share of $2.22, crushing the $1.70 forecast. Revenue climbed to $16.22 billion, exceeding expectations by nearly 8%, according to Benzinga Pro data.
Its trading business drove the beat. Equities sales and trading revenue soared to $3.33 billion, easily topping the $2.63 billion estimate. Fixed income trading also outperformed, generating $1.93 billion versus the $1.68 billion forecast.
Wealth management, a key pillar of Morgan Stanley’s business, delivered $7.48 billion in revenue, slightly above the $7.32 billion estimate. Net interest income hit $2.55 billion, well ahead of the $2 billion forecast.
The bank kept costs in check, with compensation expenses at $5.95 billion, lower than the projected $6.64 billion.
Shares rose 1.2%, extending Wednesday’s 4.8% surge.
Bank of America Tops Estimates, But 2025 Outlook In Focus
Bank of America also delivered a strong quarter, reporting EPS of 82 cents, above the 77 cents forecast. Revenue net of interest expenses came in at $25.35 billion, slightly exceeding expectations.
Key business lines performed well. Net interest income reached $14.36 billion, ahead of the $14.12 billion estimate. Investment banking revenue also beat, coming in at $1.65 billion versus the $1.47 billion forecast.
Goldman Sachs analyst Richard Ramsden noted that the results were “better than expected, given 1% higher NII and fees,” but indicated that pre-provision net revenue of $8.4 billion fell 2% short of estimates. He added that investors would focus on expense and interest income guidance for 2025.
Bank of America shares were 0.7% lower, following Wednesday’s 2.8% rally.
PNC, U.S. Bancorp, First Horizon Deliver Mixed Results
PNC Financial Services posted EPS of $3.77, beating the $3.33 estimate. Revenue of $5.57 billion edged out expectations, but shares slipped 3.8% after gaining 2.4% on Wednesday.
U.S. Bancorp delivered EPS of $1.07, slightly above the $1.05 forecast, but revenue of $6.98 billion came in just below the $7 billion estimate. The stock was down 6.6% at the time of publication Thursday, after a 3.8% jump Wednesday.
First Horizon posted EPS of 43 cents, beating estimates of 39 cents, but revenue disappointed at $729 million, well short of the $820.7 million forecast. Shares were flat, following a 2.7% gain on Wednesday.
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