Bank Earnings:Historical Results/2022 Q4

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On January 13 and 17, 2023, major banks reported their Q4 2022 financial results. Here is a summary of their performance and remarks touching on the economy.

Bank	Estimate	Actual	Remarks touching on the economy
JPMorgan Chase	Revenue: $34.5 billion Earnings: $3.07 per share	Revenue: $35.57 billion Earnings: $3.57 per share	CFO Jeremy Barnum : "The net reserve build of 1.4 billion was driven by updates to the firm's macroeconomic outlook, which now reflects a mild recession in the central case." CEO Jamie Dimon said: “The U.S. economy currently remains strong with consumers still spending excess cash and businesses healthy. However, we still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher, and the unprecedented quantitative tightening.”
Bank of America	Revenue: $24.3 billion Earnings: 0.77 per share	Revenue: $24.66 billion Earnings: 0.85 per share	Bank: Even though the credit loss provision increased by $1.6 billion to $1.1 billion compared to the same quarter in 2021, the net charge-offs was lower than the pre-pandemic levels. CEO Brian Moynihan said: “We ended the year on a strong note growing earnings year over year in the 4th quarter in an increasingly slowing economic environment." CEO Brian Moynihan said in conference call: "our baseline scenario contemplates a mild recession."
Citigroup	Revenue: $17.9 billion Earnings: $1.14 per share	Revenue: $18.01 billion Earnings: $1.10 per share	Citi CEO Jane Fraser said: "Banking and Wealth Management were impacted by the same market conditions they faced throughout the year."
Wells Fargo	Revenue: $19.98 billion Earnings: $0.68 per share	Revenue: $19.66 billion Earnings: $0.67 per share	Bank: The company recorded lower morgage banking due to fewer originations. Bank: The company increased credit loss provision by a lot to reflect loan growth and a less favorable economic environment. Charlie Scharf said: “Rising interest rates drove strong net interest income growth, credit losses have continued to increase slowly but credit quality remained strong, and we continue to make progress on our efficiency initiatives.” Scharf added: “As we look forward, we are carefully watching the impact of higher rates on our customers and expect to see deposit balances and credit quality continue to return toward pre-pandemic levels.”
Morgan Stanley	Revenue: $12.64 billion Earnings: $1.28 per share	Revenue: $12.75 billion Earnings: $1.31 per share	CEO James Gorman said: "We're not of the view that we're heading into a dark period. Whatever negativity in the world out there. That's not our house view." He added: "I'm a little more confident about the medium-term outlook for the markets."
Goldman Sachs	Revenue: $10.83 billion Earnings: $5.48 per share	Revenue: $10.59 billion Earnings: $3.32 per share	Bank noted: The company increased credit loss provision to $2.72 billion in 2022, compared to $357 million in 2021 due to growth in the credit card portfolio, the impact of macroeconomic and geopolitical concerns and net charge-offs.

Assessment of the banks earning session

The earnings results from the four major banks above were mixed. Some reported better-than-expected earning results, while others, such as Wells Fargo, were slapped with disappointing results. But one thing was clear: The US economy is drifting towards a recession this year. This was showcased by the huge loss provisions put aside by the banks. However, these bank executives' comments indicate that the recession is likely to be mild.