Analysis of Big Banks Q4 Earnings


Last week, the earnings season started with the big banks posting great results. Is it time to invest in bank stocks?

Let's first have a look at each of the Big Banks:

1. Citigroup missed revenues but beat earnings. Expectations were low on Citigroup since they have been losing a lot lately. The bank has not recovered yet from the 2008 Financial crisis. The fact that they beat earnings doesn't say that things are getting better. In fact, earnings, have been stagnant for years. The company is under book value right now but I don't see it as a good investment.

2. Bank of America beat both revenue and earnings This one surprised me. It was better than I had expected. Jim Cramer called Bank of America a growth stock and that it is the Amazon of banking, he might be right. 3. JPMorgan Chase matched revenue and missed earnings. Expectations were always high on this bank and for me this has been a great year. The fact that they missed earnings doesn't mean that they have not been growing. The main reason for this decline in earnings is weak trading in the bond market.

4. Wells Fargo missed revenue and beat earnings. The bank is still facing scandals and it will take a few years for it to recover. But these earnings are satisfactory.

5. Morgan Stanley missed both revenue and earnings. I was a little disappointed with this one. They blame the bad performance on lower revenues from wealth management because of the volatile market. If you look at the whole year, they still had a great year, only the last quarter was a disappointment.

6. Goldman Sachs beat both revenues and earnings. This bank loves volatility and it has again proved that it can make money in a volatile market. It is still facing scandals with the Malaysian Government 1MDB fund but overall it was a good performance.

I am satisfied with these results. I also want to point out that the smaller banks had also great results and they may have better growing opportunities.

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