US bank earnings fail to boost market mood

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JP Morgan, Wells Fargo and Goldman Sachs reported $83.6bn in combined Q3 revenues, however, this has not been enough to lift the market mood. US equity market futures are still pointing to a lower open later today, and the Vix is higher. The US’s largest banks are not moving in a block on the back of this earnings season, although Wells Fargo’s share price is rising in the pre-market, Goldman Sachs’ s share price is lower by 2% and JP Morgan is relatively flat. Any excuse to sell JP Morgan? JP Morgan reported revenues of $47.1bn, and net income of $14bn, the market was less impressed by the net interest income miss of 2.45%, analysts had been expecting 2.5%. With nearly five interest rate cuts priced in for the Fed between now and the start of 2027, this could be the peak for NIM. In fairness, analysts should have expected this, we think that today’s uninspired price action after a strong earnings report from JPM was an excuse to sell the stock after a strong run for the US banking sector in recent months. Loan losses manageable for now Loan loss provisions are also getting scrutinized during this earnings season, and JPM has set aside $3.4bn, which is slightly higher than analysts expected. This is not a worrying sum, and it suggests that any losses the bank accumulates can be well absorbed and are unlikely to threaten the stability of the financial system. Even the recent bankruptcies of Tricolor and First Brands in the US have had no material impact on the US’s largest lenders, JPM has written off a mere $170mn related to Tricolor losses. US jobs market leading to uncertainty, not panic Overall, the bank did not sound worried about the credit quality of its customers, and it…