Over the last five trading days, Q1 earnings season commenced with a bang for the banking stocks. Earnings reports from some mega banks reflect easing margin pressure and continued expense management.

Moreover, banks reported a rise in trading income as heightened uncertainty related to potential policy changes led to a significant rise in client activity. Also, investment banking fees seem to be rebounding. However, mortgage banking income witnessed a downtrend.

Further, all the big banks recorded a rise in loan balance, despite industry-wide dismal expectations. Additionally, driven by reserve releases, provisions for loan losses reported a fall during the quarter.

Nonetheless, the investors’ reaction was not in line with the results as banks’ share price performance was bearish over the last five trading sessions. This perhaps reflects investors’ discontent with the outlook provided by the banks.

(Read: Bank Stock Roundup for the week ending Mar 31, 2017)
 

Important Earnings of the Week

1. Impressive investment banking and trading revenues drove JPMorgan Chase & Co.’s (JPM – Free Report) first-quarter 2017 earnings of $1.65 per share, which handily outpaced the Zacks Consensus Estimate of $1.51. Moreover, results were supported by a fall in provision for credit losses, strong loan growth and higher interest rates. (Read more: JPMorgan Q1 Earnings Easily Beat with Surprising Loan Growth)

2. Driven by net interest income, Wells Fargo & Company’s (WFC – Free Report) first-quarter 2017 earnings of $1.00 per share outpaced the Zacks Consensus Estimate of 97 cents. The company witnessed organic growth aided by strong loans and deposit balances. Higher net interest income was also a positive. However, higher expenses and lower non-interest income were concerns. (Read more: Wells Fargo’s Q1 Earnings Beat on High Interest Income)

3. Citigroup Inc. (C – Free Report) delivered a positive earnings surprise of 8.9% in first-quarter 2017, riding on higher revenues. The company’s earnings per share of $1.35 outpaced the Zacks Consensus Estimate of $1.24. Notably, results reflect one-time adjustments of 1 cent. The quarter witnessed rise in overall revenues, driven by higher market revenues, supported by an improved trading environment. Moreover, results reflected prudent expense management. (Read more: Citigroup Beats on Q1 Earnings, Trading Revenues Climb)

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