Well, earnings season has arrived once again. And as always, the banks are the first to kick things off.
Yesterday, four Wall Street giants reported their third-quarter results: JPMorgan, Goldman Sachs, Citi, and Wells Fargo. Two beat analysts' expectations. The other two disappointed.
So far, nothing unusual. What's unusual is how their stocks reacted before the market even opened. JPMorgan fell short of expectations, yet its stock rose. Citi beat expectations, yet its stock fell.
So what happened? And what does all of this tell us about the big banks?
THE WINNERS
Let's start with Goldman Sachs, which delivered the biggest surprise. Analysts expected earnings of $13.09 per share. Goldman Sachs delivered $17.01. Revenue reached $18.7 billion, compared with the market's expectations of $16.9 billion. According to CEO David Solomon, these were the bank's second-highest quarterly revenues in history and a record for the first nine months of the year.
"And why did revenue fall compared with the previous quarter?" you might be wondering.
Because revenue from the markets business was unusually high in the second quarter. This time, the pace slowed. Revenue from fixed income, currencies, and commodities fell 24% compared with the second quarter. But equities revenue was up 72% year over year. Wealth management also grew 14%. The result? The stock fell 0.29%.
Now let's move on to Citi. Earnings came in at $2.85 per share, compared with analysts' expectations of $2.65. And this was despite a $726 million accounting loss related to the agreement to sell 25% of Banamex. Revenue reached $23.8 billion, slightly above expectations. According to CEO Jane Fraser, these were the best third-quarter revenues in a decade.
What drove the performance? The Services and Wealth Management businesses, both of which grew 15% year over year. By contrast, Markets revenue fell 13% compared with the second quarter. Citi also raised its guidance for 2026. And yet, its stock fell 5.62%!
THE DISAPPOINTMENTS
This brings us to JPMorgan, the largest bank in the United States by assets. Earnings came in at $5.57 per share, compared with expectations of $5.94. Revenue reached $50.9 billion, versus the expected $51.2 billion. In other words, both figures came in below expectations.
"What went wrong?" you might be wondering.
Commercial and investment banking. Following a very strong second quarter, revenue in this business fell 9%, while net income declined 15%.
Still, not everything was bad. Consumer banking increased its net income by 13% year over year. And net interest income came in at $27.1 billion, above expectations.
What exactly is that?
Put simply, it's the money a bank earns from the difference between the interest it collects on loans and the interest it pays on deposits.
JPMorgan also raised its full-year 2026 net interest income forecast to approximately $106.2 billion. CEO Jamie Dimon said the bank had reduced its share buybacks because he believes it can invest that capital at very attractive returns for shareholders.
The stock ultimately fell 0.94%.
Wells Fargo, meanwhile, delivered a more mixed picture. Earnings per share came in at $1.87, slightly above the expected $1.85. Revenue, however, reached $21.87 billion, falling short of forecasts of $22.28 billion.
Why?
Corporate and investment banking generated $5.01 billion, compared with expectations of $5.41 billion. As if that weren't enough, the division covering treasury management and the bank's central operations swung to a loss of $610 million.
CEO Charlie Scharf also pointed to lower venture capital investment income and reduced leasing revenue following the sale of the bank's railcar leasing business.
Consumer banking, commercial banking, and wealth management all performed better than expected.
Nevertheless, the stock fell 3.08%, closing at $80.74.
WHAT DO THEY HAVE IN COMMON?
If we put the four banks side by side, several clear patterns emerge.
First, Wall Street has lost some momentum. Investment banking and markets were the weak spots across the board. But here's something worth noting: all four banks increased their revenue compared with the same period last year.
Second, wealth management helped keep all four banks on track. Citi grew 15%, Goldman Sachs and JPMorgan each grew 14%, and Wells Fargo grew 12%.
Third, provisions for loan losses came in below expectations at all four banks.
"And what exactly are these provisions?" you might be wondering.
In simple terms, they're the funds a bank sets aside for loans it fears might not be repaid.
And Scharf made the point clearly. Wells Fargo's data suggest that its customers are doing well. They're spending more, loan delinquencies remain low, and their deposits are growing.
Fourth, all four banks expanded, with both loans and deposits increasing.
Of course, there's one big "but."
Scharf himself warned about higher interest rates, higher oil prices, and persistent inflation. However, he believes that investment in AI infrastructure, strong employment, and steady wage growth carry more weight.
Seeking Alpha analyst Steve Booyens, however, is more cautious. Regarding Citi, he says he personally doesn't see the current momentum lasting.