US banks: Goldman, BofA and Citi beat market estimates

Every credit institution is a story in itself. Thus Citigroup, for example, is facing a transformation plan which, on the one hand, should enable the company to achieve sustainable Return on Tangible Common Equity (RoTCE) of 11-12%; and which, on the other, puts the bank at the centre of political commentary (not least that of Democratic Senator Elisabeth Warren on the need to strengthen further). Having said that, however, there is a common thread linking the major US banks that published their third quarter figures yesterday. All of them - some with profits up, some with profits down - managed to beat consensus estimates.

Bank of America can look to Bank of America in this respect. The institution's profits in the third quarter of 2024 fell by 12%. The bank, in particular, reported a net profit of USD 6.9 billion (it had been USD 7.8 billion in the same period of 2023). Earnings per share, for its part, were 81 cents, still down from 90 cents a year earlier. Analysts' expectations? The forecast was, according to FacSet, 76 cents per share. On the other hand, the first line of the income statement showed revenues of USD 25.3 billion, up slightly from 2023. Wall Street had estimated USD 25.25 billion. Net interest income, a relevant indicator in the banking business, finally dropped by 3% compared to last year, as the bank paid out more for deposits.

From Bank of America to Goldman Sachs,. The latter reported earnings per share of $8.40 in the third quarter of 2024. This is higher than the analysts' estimates of $6.89. Net income also - evidently - increased year-on-year to USD 3 billion. Here, too, the consensus gathered by FactSet was expecting $2.38 billion. The New York investment bank's revenues rose to $12.7 billion, exceeding analysts' expectations of $11.77 billion. Beyond the individual numbers, Goldman's earnings show that the capital markets business has gradually returned to normal after a period of muted activity caused by high interest rates. Total investment banking fees were up 20% year-on-year and 8% quarter-on-quarter. In Goldman Banking and Markets' global division, advisory revenues increased 5% year-on-year, while equity and bond underwriting rose 25% and 46% respectively. This reflects a jump in secondary offerings on the equity side and an increase in leveraged finance and investment-grade activity on the bond side.

Charles Schwab reported, on the one hand, an adjusted earnings per share - again in the third quarter - of 77 cents; and, on the other hand, revenues of $4.847 billion. These values are slightly above Wall Street's estimates (75 cents for EPS and $4.786 billion for revenue). In the same period last year, Schwab reported earnings of 77 cents and revenues of $4.6 billion. That said Schwab, among the largest US wealth management firms, posted a record for client assets: these came in at $9.92 trillion, up 27% from the same period last year. The firm took in 95.3 billion in net new core assets, representing new money coming into Schwab from both new and existing clients.

Last but not least, Citi. The fourth largest US bank by assets reported earnings per share of $1.51, beating analysts' estimates of $1.31. Net income fell to $3.2 billion year-on-year; analysts polled by FactSet had forecast $2.55 billion. Citi also reported $20.3 billion in revenue, exceeding analysts' expectations of $19.86 billion. Net interest income, a key driver of revenue, was $13.83 billion, higher than the $13.57 billion expected. In the third quarter of 2023, Citi had reported net income of $3.55 billion, or $1.63 per share, on revenue of $20.14 billion. Net interest income had been $13.83 billion.