Four of America's six biggest banks reported third-quarter results on Tuesday, and the scorecards could hardly look more different. JPMorgan Chase posted a rare earnings miss — $5.57 per share against analyst expectations of about $5.93, on revenue of $50.91 billion that also fell short of the $51.23 billion consensus. Goldman Sachs went the other way entirely: $17.01 per share against a $12.86 estimate, with net revenue of $18.68 billion crushing the $16.83 billion the Street expected. Citigroup beat comfortably with $2.85 per share versus $2.65 expected, its highest July-September revenue in ten years. Wells Fargo landed in the middle, edging profit estimates at $1.87 per share but missing on revenue at $21.87 billion against a $22.31 billion consensus.
The share-price verdict was just as divided. Goldman climbed around 1% on the blowout. JPMorgan reversed an early slide to finish up under 1%. Wells Fargo dropped about 1.3%. And Citigroup fell despite its beat — a reminder that good numbers only count if the market hasn't priced in better.
Why it matters
The split inside the numbers tells the story of the quarter. The three months through September were volatile — the Federal Reserve's September 16 rate hike to 3.75%-4.00%, the Middle East conflict, and a slump in semiconductor shares sent investors reshuffling portfolios aggressively. That chaos was a gift to equity trading desks: Goldman's equities revenue surged 72% to $6.44 billion, and JPMorgan's equities revenue jumped 49%. Bond trading was the mirror image. JPMorgan's fixed-income revenue unexpectedly fell 4% to $5.4 billion, missing estimates by roughly $550 million, while Goldman's fixed-income, currency and commodities revenue slipped 1% to $3.47 billion. For JPMorgan, the miss was about costs as much as trading — expenses ran about $90 million above expectations, with costs growing 12% over the past 12 months against just 8% revenue growth.
Investment banking, oddly, held up better than deal volumes suggest. The quarter's global deal volume dropped 41% from the prior quarter to $993 billion — the first sub-$1 trillion quarter in five quarters, according to LSEG data — yet Goldman's investment banking fees rose 21% to $3.22 billion on stronger advisory and underwriting, with advisory revenue up 18%. Banks are winning market share in a smaller deal pie.
What to watch
- The last two big-bank reports arrive Wednesday, October 14 — BofA and Morgan Stanley. State Street and BlackRock report the same day, closing out the week's big financial earnings.
- Credit quality: JPMorgan set aside $2.74 billion for credit losses and added $539 million to reserves, though net charge-offs actually fell $389 million from a year ago. Watch whether Wednesday's reporters add to their cushions too.
- Net interest income: JPMorgan's $27 billion edged past the $26.9 billion consensus — a tailwind from the September hike — but Wells Fargo's $12.52 billion missed the $12.66 billion estimate. The split shows the hike helps lenders unevenly.
- December Fed pricing: JPMorgan CEO Jamie Dimon warned Tuesday that another percentage point of rate hikes would worsen financial pain across the US, and traders are pricing roughly a 70% chance of a quarter-point hike in December. That's the next big input for bank margins and loan demand.
| Bank | EPS: reported vs consensus | Revenue: reported vs consensus |
|---|---|---|
| JPMorgan | $5.57 vs $5.93 → −6.1% miss | $50.91B vs $51.23B → −0.6% miss |
| Goldman Sachs | $17.01 vs $12.86 → +32.3% beat | $18.68B vs $16.83B → +11.0% beat |
| Citigroup | $2.85 vs $2.65 → +7.5% beat | $23.85B vs $23.72B → +0.5% beat |
| Wells Fargo | $1.87 vs $1.85 → +1.1% beat | $21.87B vs $22.31B → −2.0% miss |
MarketRadar take
Tuesday's reports argue against treating banks as one trade. Goldman's 32% earnings beat rewards exposure to trading and dealmaking in volatile markets, while JPMorgan's miss was a cost-control story, not a credit story — charge-offs actually fell, and net interest income beat. Bank valuations still look modest: the KBW bank index's forward P/E sits near 10.9 against 19.3 for the S&P 500, with Citigroup the cheapest of the big six at a 10.4 forward multiple. The near-term risk is rates going higher than the December hike markets expect, which would test loan growth even as it pads net interest income. With BofA and Morgan Stanley still to report on Wednesday, the week's verdict on the sector is still open.
