Elon Musk, chief executive officer of Tesla Inc and X (formerly Twitter) Ceo speaks at the Atreju political convention organized by Fratelli d’Italia (Brothers of Italy), on December 15, 2023 in Rome, Italy.
Antonio Masiello | Getty Images
Tesla reported revenue and profit for the fourth quarter that missed analysts’ estimates as auto sales increased just 1% from a year earlier. The stock slid in extended trading.
Here are the key numbers:
Earnings: 71 cents per share, adjusted, vs. 74 cents per share expected by LSEG, formerly known as Refinitiv.
Revenue: $25.17 billion vs. $25.6 billion expected by LSEG.
Total revenue increased 3% from $24.3 billion a year earlier. Operating margin for the quarter came in at 8.2%, down from the year-ago quarter’s figure of 16% and slightly higher than 7.6% in the prior quarter.
While other U.S. automakers struggled to make and sell a high volume of fully electric vehicles last year, Tesla reported 484,507 deliveries in the fourth quarter and more than 1.8 million for 2023. Hefty price cuts helped Tesla achieve that number, which was a record for the company.
Net income for the quarter more than doubled to $7.9 billion from $3.7 billion a year earlier.
During the quarter, Tesla began selling Cybertrucks to customers. The company said in its investor presentation that, “We expect the ramp of Cybertruck to be longer than other models given its manufacturing complexity.” Tesla said it now has the capacity to build more than 125,000 Cybertruck vehicles in a year.
Tesla’s labor costs are rising in the U.S.. In order to make its wages competitive versus automakers like General Motors, Ford and Stellantis, where employees are represented by the United Auto Workers, Tesla recently rolled out pay increases for many of its hourly factory employees in the U.S.
Citigroup on Friday posted a $1.8 billion fourth-quarter loss after booking several large charges tied to overseas risks, last year’s regional banking crisis and CEO Jane Fraser’s corporate overhaul.
All told, the charges — so massive the bank preannounced their effect this week — hit quarterly earnings by $4.66 billion, or $2 per share, Citigroup said. Excluding their effect, earnings would’ve been 84 cents a share, the bank said.
Here’s what the company reported versus what Wall Street analysts surveyed by LSEG, formerly known as Refinitiv, expected:
Earnings: 84 cents a share, adjusted, may not compare with 81 cents, expected.
Revenue: $17.44 billion vs. $18.74 billion expected.
Fraser called her company’s performance “very disappointing” because of the charges but said Citigroup had made “substantial progress” simplifying the bank last year.
The CEO announced plans for a sweeping corporate reorganization in September after previous efforts failed to boost the bank’s results and share price. On Friday, Citi said it expects to cut its headcount by 20,000 and post up to $1 billion in severance costs over the medium term.
Citigroup previously said it would exit municipal bond and distressed debt trading operations as part of the streamlining exercise. Earlier this week, the company said it booked bigger charges in the quarter than previously disclosed by Chief Financial Officer Mark Mason.
Citigroup revenue slipped 3% to $17.44 billion in the quarter, though the bank said revenue rose 2% after excluding the effect of divestitures and charges tied to exposure to Argentina. Despite the noise, Citi’s institutional services operations, U.S. personal banking and investment banking performed well, according to the bank.
“Citigroup’s earnings looked awful with a big loss of $1.8 billion, but the bank’s underlying business showed resilience,” Octavio Marenzi, CEO of consulting firm Opimas LLC, said in an email. Fraser will be under mounting pressure to deliver results this year, he added.
Shares of Citigroup rose 2% during premarket trading.
Bank of America Chairman and CEO Brian Thomas Moynihan speaks during the U.S. Senate Banking, Housing and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill in Washington, U.S., December 6, 2023.
Evelyn Hockstein | Reuters
Bank of America reported fourth-quarter earnings before the opening bell Friday.
Here’s what the company reported compared with what Wall Street analysts surveyed by LSEG, formerly known as Refinitiv, were expecting:
Earnings: 70 cents, vs. expected 68 cents per share
Bank of America stock is down more than 1% this year after a mere 1.7% gain in 2023. The S&P 500 financial sector gained 10% last year.
The bank was supposed to be one of the biggest beneficiaries of higher interest rates last year, but it underperformed its peers because the lender had piled into low-yielding, long-dated securities during the Covid pandemic. Those securities lost value as interest rates climbed.
This story is developing. Please check back for updates.
Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled Annual Oversight of Wall Street Firms, in the Hart Building on Dec. 6, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images
JPMorgan Chase reported fourth-quarter earnings before the opening bell Friday.
Here’s what the company reported compared with what Wall Street analysts surveyed by LSEG, formerly known as Refinitiv, were expecting:
Earnings per share: $3.04, may not compare with expected $3.32
Revenue: $39.94 billion, vs. expected $39.78 billion
JPMorgan will be watched closely for clues on how banks fared amid volatile interest rates and rising loan losses.
While the biggest U.S. bank by assets has navigated the rate environment capably since the Federal Reserve began raising rates in early 2022, smaller peers have seen their profits squeezed.
The industry has been forced to pay up for deposits as customers shift cash into higher-yielding instruments, squeezing margins. At the same time, rising yields mean the bonds owned by banks fell in value, creating unrealized losses that pressure capital levels.
Concern is also mounting over rising losses from commercial loans, especially office building debt, and higher defaults on credit cards.
Beyond guidance on net interest income and loan losses for this year, analysts will want to hear what CEO Jamie Dimon has to say about the economy and banks’ efforts to tone down coming increases in capital requirements.
Wall Street may provide some help this quarter, with investment banking revenue higher than a year earlier, while trading may be “flattish,” JPMorgan said last month at a conference.
Beaten-down shares of banks recovered in November on expectations that the Fed had successfully managed inflation and could cut rates this year.
Shares of JPMorgan jumped 27% last year, the best showing among big bank peers and outperforming the 5% decline of the KBW Bank Index.
Shoppers arrive at an Ulta Beauty store in Las Vegas, Nevada, US, on Monday, May 22, 2023. Ulta Beauty Inc. is scheduled to release earnings figures on May 25.
Bridget Bennett | Bloomberg | Getty Images
Shares of Ulta Beauty rose in after-hours trading on Thursday, as the company said its third-quarter sales rose while shoppers showed once again they’re willing to spend on makeup, face masks and more even when the budget is tight.
The specialty beauty retailer raised the bottom end of its range for full-year sales and earning expectations. It said it expects net sales for the fiscal year to be between $11.10 billion and $11.15 billion, and comparable sales to range from 5.0% to 5.5%. It said adjusted earnings per share for the year will range from $25.20 to $25.60
In a news release, CEO Dave Kimbell said the retailer saw healthy sales trends and added customers to its loyalty program. He said it’s ready for the holidays and believes “the outlook for the Beauty category is bright.”
Here’s what Ulta reported for the three-month period that ended Oct. 28:
Earnings per share: $5.07
Revenue: $2.49 billion
It was not immediately clear if those numbers were comparable to consensus estimates from LSEG, formerly known as Refinitiv.
The company’s shares rose as much as 10% in extended trading.
Ulta also announced a leadership change on Thursday. Chief Financial Officer Scott Settersten is retiring in April after nearly two decades at the beauty retailer. The company said he will be replaced by Paula Oyibo, Ulta’s senior vice president of finance.
In the fiscal third quarter, net income rose to $249.5 million, or $5.07 per share, from $274.6 million, or $5.34 per share, in the year-ago period. Revenue increased from $2.34 billion in the year-ago period.
Comparable sales, a metric that tracks Ulta stores open at least 14 months along with online sales, increased 4.5% year over year.
During the quarter, customers made more trips to Ulta’s stores and website, but spent slightly less. Transactions went up by nearly 6% and average ticket declined by 1.4% compared with the year-ago period.
Beauty has been one of the hottest categories for retailers over the past year. Even as consumers pull back on other types of discretionary purchases, they have continued to spend on makeup, face masks, fragrances and more.
That’s inspired retailers, including Macy’s, Target and Kohl’s to lean into the category by adding new brands, products and square footage. Target, for example, has a growing number of Ulta shops in its stores.
As of Thursday’s close, Ulta shares had fallen about 9% so far this year. That compares to the S&P 500, which is up about 19% year to date.
Shares of the company closed at $425.99on Thursday, bringing the company’s market value to about $20.97 billion.
This is breaking news. Please check back for updates.
Nvidia shares moved down 1% in extended trading on Tuesday after the chipmaker reported fiscal third-quarter results that surpassed Wall Street’s predictions. But the company called for a negative impact in the next quarter because of export restrictions affecting sales to organizations in China and other countries.
“We expect that our sales to these destinations will decline significantly in the fourth quarter of fiscal 2024, though we believe the decline will be more than offset by strong growth in other regions,” Nvidia’s finance chief, Colette Kress, said in a letter to shareholders.
On a conference call with analysts, Kress said Nvidia is working with some clients in the Middle East and China to obtain U.S. government licenses for sales of high-performance products. Nvidia is trying to develop new data center products that comply with government policies and don’t require licenses, but Kress said she didn’t think they would be meaningful in the fiscal fourth quarter.
Here’s how the company did, compared to the consensus among analysts surveyed by LSEG, formerly known as Refinitiv:
Earnings: $4.02 per share, adjusted, vs. $3.37 per share expected
Revenue: $18.12 billion, vs. $16.18 billion expected
Nvidia’s revenue grew 206% year over year during the quarter ending Oct. 29, according to a statement. Net income, at $9.24 billion, or $3.71 per share, was up from $680 million, or 27 cents per share, in the same quarter a year ago.
The company’s data center revenue totaled $14.51 billion, up 279% and more than the StreetAccount consensus of $12.97 billion. Half of the data center revenue came from cloud infrastructure providers such as Amazon, and the other from consumer internet entities and large companies, Nvidia said.
Healthy uptake came from clouds that specialize in renting out GPUs to clients, Kress said on the call.
The gaming segment contributed $2.86 billion, up 81% and higher than the $2.68 billion StreetAccount consensus.
With respect to guidance, Nvidia called for $20 billion in revenue for the fiscal fourth quarter. That implies nearly 231% revenue growth.
During the quarter, Nvidia announced the GH200 GPU, which has more memory than the current H100 and an additional Arm processor onboard. The H100 is expensive and in demand. Nvidia said Australia-based Iris Energy, an owner of bitcoin mining data centers, was buying 248 H100s for $10 million, which works out to about $40,000 each.
Computing instances based on the GH GPUs are coming soon to Oracle’s cloud, Kress said on the call.
As recently as two years ago, sales of GPUs for playing video games on PCs were the largest source of Nvidia’s revenue. Now the company gets most revenue from deployments inside server farms.
The introduction of the ChatGPT chatbot from Microsoft-backed startup OpenAI in 2022 caused many companies to look for ways to add similar generative artificial intelligence capabilities to their software. Demand for Nvidia’s GPUs strengthened as a result.
Nvidia faces obstacles, including competition from AMD and lower revenue because of export restrictions that can limit sales of its GPUs in China. But ahead of Tuesday report, some analysts were nevertheless optimistic.
“GPU demand continues to outpace supply as Gen AI adoption broadens across industry verticals,” Raymond James’ Srini Pajjuri and Jacob Silverman wrote in a note Monday to clients, with a “strong buy” recommendation on Nvidia stock. “We are not overly concerned about competition and expect NVDA to maintain >85% share in Gen AI accelerators even in 2024.”
Nvidia is still working on its plan to grow supply throughout next year, Kress said on the call.
Excluding the after-hours move, Nvidia stock has gone up 241% so far this year, vastly outperforming the S&P 500 index, which is up 18% over the same period.
Atchison, Kansas. Walmart store logo with gardening products for sale.
Universal Images Group | Getty Images
Walmart on Thursday topped Wall Street’s fiscal third-quarter earnings estimates as sales rose, but the big-box retailer struck a cautious tone with its outlook after it saw consumer spending weaken at the end of the period.
The company’s shares slid more than about 8% on Thursday after they touched an all-time high the previous day. Walmart gave a slightly lower-than-expected forecast for the year as it enters the critical holiday shopping season.
The company anticipates adjusted earnings per share of $6.40 to $6.48 for the year, lower than the $6.48 analysts expect but higher than its previous range. Walmart expects consolidated net sales will rise 5% to 5.5%, also an increase from its prior range.
Inflation has also waned — and for some categories, deflation has taken hold — a trend that could help Walmart’s shoppers but hurt the company’s sales.Prices of some grocery items remain higher, but they have fallen for dairy, eggs, chicken and seafood, CEO Doug McMillon said on the company’s earnings call. He added that relief is coming for customers as they look for holiday gifts.
General merchandise prices have continued to fall, setting up the company for a turnabout. Its sales have risen in part because shoppers have had to pay higher prices for many items during a period of inflation.
“In the U.S., we may be managing through a period of deflation in the months to come and while that would put more unit pressure on us, we welcome it, because it’s better for our customers,” he said.
In a separate interview with CNBC, Chief Financial Officer John David Rainey said consumers are “leaning heavily” into major promotions as they watch their spending and search for deals. As customers hold out for lower prices, the company has seen a drop in purchases before and after a sales event.
“Our events have been strong,” he said. “We’ve been pleased with those. Halloween was good overall. But in the last couple of weeks of October, there were certainly some trends in the business that made us pause and kind of rethink the health of the consumer.”
At the start of the holiday quarter, however, he said sales of items including clothing picked up as holiday promotions gained momentum.
Here’s what Walmart reported for the three-month period ended Oct. 31 compared with what analysts were expecting, according to consensus estimates from LSEG, formerly known as Refinitiv:
Earnings per share: $1.53 adjusted vs. $1.52 expected
Revenue: $160.80 billion vs. $159.72 billion expected
In the fiscal third quarter, Walmart’s net income rose to $453 million, or 17 cents per share, compared with a loss of $1.8 billion, or 66 cents per share, in the year ago period. Walmart posted a loss in that quarter due to a settlement of opioid-related legal charges.
Revenue rose from $152.81 billion in the year-ago period. It climbed on the strength of the retailer’s grocery business, which has thrived during a period of high inflation, and digital sales.
Comparable sales, an industry metric also known as same-store sales, rose 4.9% for Walmart U.S. and at Sam’s Club, they rose 3.8% year over year.
In the U.S., shoppers both visited and spent more. Customer transactions rose 3.4% and the average ticket grew 1.5% compared with a year earlier. E-commerce sales increased 24% in the U.S. and 15% across the globe year over year.
Walmart is also making money in newer ways, such as selling ads and annual memberships to Walmart+, its answer to Amazon Prime.
Revenue for its ad business, Walmart Connect, jumped 26% from the prior-year period.
As the holidays approach, investors have bet the big-box retailer has the ingredients to drive sales, even as shoppers are more discerning. It’s the nation’s largest grocer, which helps drum up steadier foot traffic.
Shares of the company touched an all-time high Wednesday dating to when Walmart debuted on the New York Stock Exchange in August 1972. The stock closed at nearly $170 on Wednesday, up about 19% for the year. On Thursday, however, shares closed the day at $156.04.
Food is served at a Chipotle restaurant on in Chicago, Illinois.
Scott Olson | Getty Images
Chipotle Mexican Grill on Thursday reported quarterly earnings that beat expectations, helped by higher menu prices for its burritos and bowls.
Shares of the company rose more than 5% in extended trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:
Earnings per share: $11.36 adjusted vs. $10.55 expected
Revenue: $2.47 billion, in line with expectations
The burrito chain reported third-quarter net income of $313.2 million, or $11.32 per share, up from $257.1 million, or $9.20 per share, a year earlier. Excluding corporate restructuring costs, Chipotle earned $11.36 per share.
Beef and queso costs rose this quarter, largely offsetting last year’s menu price hikes. Earlier this month, Chipotle raised menu prices for the first time in more than a year, citing inflation.
The company had paused its aggressive price hikes earlier this year as consumers pulled back their restaurant spending. Still, CEO Brian Niccol has maintained that Chipotle has pricing power and more room to run.
Net sales climbed 11.3% to $2.47 billion. Same-store sales rose 5%, beating StreetAccount estimates of 4.6%. The company credited higher transactions and menu prices for the quarter’s same-store sales growth.
Chipotle opened 62 new restaurants during the quarter. All but eight of those locations featured a “Chipotlane,” a drive-thru lane reserved for picking up digital orders.
Looking to 2024, the company expects that it will open 285 to 315 new restaurants.
Chipotle also reiterated its forecast for 2023 same-store sales growth in the mid-to-high single digit range.
The streaming giant said after the market closed Wednesday that it had added 8.76 million global subscribers during the third quarter, higher than 5.49 million Wall Street had expected, according to estimates from Street Account. It’s the biggest quarterly net add total for the company since it added 10.1 million subscribers in the second quarter of 2020 – when Covid restrictions kept people home.
Here are the results:
Earnings: $3.73 vs $3.49 per share expected, according to LSEG, formerly known as Refinitiv
Revenue: $8.54 billion vs $8.54 billion expected, according to LSEG
Total memberships expected: 247.15 million vs. 243.88 million expected, according to Street Account
Netflix said that its ad plan membership grew nearly 70% quarter over quarter, although it did not disclose what percentage of its base is subscribed to this tier.
Revenue in the third quarter rose to $8.54 billion from $7.93 billion a year earlier. Net income came in at $1.68 billion, or $3.73 per share, compared with $1.4 billion, or $3.10 per share.
The results were the latest confirmation that Netflix rules the streaming world, as its would-be rivals scratch and claw to become profitable.
The company’s dominance shows in its pricing power. Netflix said it is keeping its ad tier pricing at at $6.99 a month in the U.S. while its basic and premium services will see a price hike starting Wednesday. Netflix’s basic plan will now cost $11.99 (up from $9.99) and premium will be $22.99 a month (up from $19.99). Netflix’s standard plan will remain at $15.49 a month.
The price increases come as the company seeks to improve its profitability and grapple with higher production costs.
As part of its new deal with Hollywood’s writers, Netflix, alongside other members of the Alliance of Motion Picture and Television Producers, have agreed to higher wages and monetary benefits based on streaming popularity. The AMPTP has yet to finish negotiations with striking actors, but expectations are that costs for creating content will rise when a new contract is finalized.
“We spent hours and hours with SAG-AFTRA over the last few weeks and we were actually very optimistic that we were making progress,” said co-CEO Ted Sarandos during the company’s taped earnings comments Wednesday. “But then at the very end of our last session together the guild presented this new demand on top of everything of a per subscriber levy, unrelated to viewing or success, and this really broke our momentum unfortunately.”
Sarandos noted that Netflix and other members of the AMPTP remain committed to reaching an agreement with actors. It is unclear when negotiations will continue. Talks have been stalled for about a week.
Representatives from SAG-AFTRA did not immediately respond to CNBC’s request for comment.
The company forecast that revenue will jump 11% in the fourth quarter, reaching $8.69 billion, below Wall Street expectations of $8.77 billion. Netflix said it expects net subscriber adds will be similar to the third quarter.
Netflix stock performance this year
It warned that the strength of the U.S. dollar in recent months will result in a roughly $200 million drag on fourth-quarter revenue.
As for Netflix’s profitability, the streamer now expects its full-year 2023 operating margin will be around 20%, the high end of its previous forecast range of 18% to 20%. It also said full-year 2024 should see operating margins of 22% to 23%.
The company also addressed shareholder concern about its executive compensation model, telling investors that it would make “substantial changes” in 2024 to a more conventional model. Compensation will still be based on performance.
Sarandos and former co-CEO Reed Hastings each took home more than $50 million in 2022. Hastings took most of his earnings in stock options, while Sarandos elected to have a $20 million base salary and the rest in stock.
After Greg Peters was named co-CEO and Hastings stepped down, the company set a salary cap of $3 million for executives. However, they are still entitled to an annual target bonus and additional stock rewards.
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Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is a member of the AMPTP.
Morgan Stanley Chairman and Chief Executive James Gorman speaks during the Institute of International Finance Annual Meeting in Washington, October 10, 2014.
Joshua Roberts | Reuters
Morgan Stanley posted third-quarter results Wednesday that topped profit estimates on better-than-expected trading revenue.
Here’s what the company reported:
Earnings per share: $1.38, vs. $1.28 estimate from LSEG, formerly known as Refinitiv
Revenue: $13.27 billion, vs. expected $13.23 billion
Profit fell 9% to $2.41 billion, or $1.38 a share, from a year ago, the New York-based bank said in a statement. Revenue grew 2% to $13.27 billion, essentially matching expectations.
The bank’s shares fell more than 5% in early trading.
Morgan Stanley’s trading operations helped offset revenue misses elsewhere at the firm. The bank’s bond traders produced $1.95 billion in revenue, roughly $200 million more than the StreetAccount estimate, while equity traders brought in $2.51 billion in revenue, $100 million more than expected.
But the bank’s all-important wealth management division generated $6.4 billion in revenue, below the estimate by more than $200 million, as compensation costs in the division rose.
Investment banking accounted for another miss in the quarter, producing $938 million in revenue, below the $1.11 billion estimate, as the company cited weakness in mergers and IPO listings. The bank’s investment management division essentially met expectations with $1.34 billion in revenue.
Morgan Stanley shares have been under pressure this year.
CEO James Gorman cited a “mixed” environment for his businesses and acknowledged that the firm’s wealth management division gathered fewer new assets than in recent quarters. That’s because surging interest rates have made money market funds and Treasuries attractive, he told analysts Wednesday. The wealth management business was still tracking to hit his three-year goal of generating $1 trillion in new assets, he added.
“When people have a choice of making a 4%, 5% return by doing nothing, they’re not going to be trading in the markets,” Gorman said.
Led by Gorman since 2010, Morgan Stanley has managed to avoid the turbulence afflicting some rivals lately. While Goldman Sachs was forced to pivot after a foray into retail banking and as Citigroup struggles to lift its stock price, the main question at Morgan Stanley is about an orderly CEO succession.
In May, Gorman announced his plan to resign within a year, capping a successful tenure marked by massive acquisitions in wealth and asset management. Morgan Stanley’s board has narrowed the search for his successor to three internal executives, he said at the time.
Gorman reiterated his desire to hand over the CEO position to a successor within months.
“This firm is in excellent shape notwithstanding the geopolitical and market turmoil that we find ourselves in,” Gorman said. “My hope and expectation is to hand over Morgan Stanley with as clean a slate as possible and deal with a few of our outstanding issues in the next couple of months.”
Last week, JPMorgan Chase, Wells Fargo and Citigroup each topped expectations for third-quarter profit, helped by low credit costs. Goldman Sachs and Bank of America also beat estimates on stronger-than-expected bond trading results.
This story is developing. Please check back for updates.
Bank of America topped estimates for third-quarter profit on Tuesday on stronger-than-expected interest income.
Here’s what the company reported:
Earnings per share: 90 cents vs. expected 82 cent estimate from LSEG, formerly known as Refinitiv
Revenue: $25.32 billion, vs. expected $25.14 billion
Profit rose 10% to $7.8 billion, or 90 cents per share, from $7.1 billion, or 81 cents a share, a year earlier, the Charlotte, North Carolina-based bank said in a release. Revenue climbed 2.9% to $25.32 billion, edging out the LSEG estimate.
Bank of America said interest income rose 4% to $14.4 billion, roughly $300 million more than analysts had anticipated, fueled by higher rates and loan growth.
CEO Brian Moynihan said the bank continued to add clients despite economic pressures. While consumer banking deposits were down 8% in the quarter, the segment posted a 6% increase in revenue to $10.5 billion, according to the company.
“We did this in a healthy but slowing economy that saw U.S. consumer spending still ahead of last year but continuing to slow,” he said in an earnings release.
Bank of America was supposed to be one of the biggest beneficiaries of higher interest rates this year. Instead, the company’s stock has been the worst performer among its big-bank peers in 2023. That’s because, under CEO Brian Moynihan, the lender piled into low-yielding, long-dated securities during the pandemic. Those securities lost value as interest rates climbed.
That’s made Bank of America more sensitive to the recent surge in the 10-year Treasury yield than its peers — and more similar to some regional banks that are also nursing underwater bonds. Bank of America had more than $100 billion in paper losses on bonds at midyear.
The situation has pressured the bank’s net interest income, or NII, which is a key metric that analysts will be watching this quarter. In July, the bank’s CFO, Alistair Borthwick, affirmed previous guidance that NII would be roughly $57 billion for 2023.
Bank of America shares were up about 1% in premarket trading Tuesday. The stock bad fallen 18% this year through Monday, trailing the 10% gain of rival JPMorgan Chase.
Last week, JPMorgan, Wells Fargo and Citigroup each topped expectations for third-quarter profit, helped by better-than-expected credit costs. Morgan Stanley posts results Wednesday.
This story is developing. Please check back for updates.
David Solomon, chief executive officer of Goldman Sachs Group Inc., at the Goldman Sachs Financial Services Conference in New York, Dec. 6, 2022.
Michael Nagle | Bloomberg | Getty Images
Goldman Sachs is scheduled to report third-quarter earnings before the opening bell Tuesday.
Here’s what Wall Street expects:
Earnings: $5.31 a share, according to LSEG, formerly known as Refinitiv
Revenue: $11.19 billion
Trading revenue: fixed income $2.8 billion, equities $2.73 billion, per StreetAccount
Investment banking revenue: $1.48 billion
Is Wall Street deal-making on the mend?
Among its big bank peers, Goldman Sachs is the most reliant on investment banking and trading revenue.
While it’s made efforts under CEO David Solomon to diversify its revenue stream, first in an ill-fated retail banking push and later as it emphasized growth in asset and wealth management, it is Wall Street that powers the company. Last quarter, trading and advisory accounted for two-thirds of Goldman’s revenue.
That’s been a headwind as mergers, initial public offerings and debt issuance all have been muted this year as the Federal Reserve boosted interest rates to slow the economy down. With signs that activity has picked up lately, analysts will be eager to hear about Goldman’s pipeline of deals.
At the same time, Goldman has taken hits from two areas: Its strategic retrenchment away from retail banking has saddled the firm with losses as it finds buyers for unwanted operations, and its exposure to commercial real estate has resulted in write-downs as well.
Last week, Goldman said that its sale of lending business GreenSky will result in a 19 cents per share hit to third-quarter results.
Analysts will be keen to hear Solomon’s view on the investment banking outlook, as well as how the remaining parts of its consumer effort — mainly, its Apple Card business — fit in the latest iteration of Goldman Sachs.
Goldman shares have dropped 8.4% this year through Monday, a better showing than the 21% decline of the KBW Bank Index.
Last week, JPMorgan, Wells Fargo and Citigroup each topped expectations for third-quarter profit, helped by better-than-expected credit costs. Morgan Stanley posts results Wednesday.
This story is developing. Please check back for updates.
Jamie Dimon, chairman and CEO of JPMorgan Chase, at the U.S. Capitol for a lunch meeting with the New Democrat Coalition in Washington, D.C., June 6, 2023.
Nathan Howard | Bloomberg | Getty Images
JPMorgan Chase is scheduled to report third-quarter earnings before the opening bell Friday.
Here’s what Wall Street expects, according to analyst estimates compiled by LSEG, formerly known as Refinitiv
Earnings per share: $3.96
Revenue: $39.65 billion
JPMorgan will be watched closely for clues on how the industry fared amid surging interest rates and rising loan losses.
While the biggest U.S. bank by assets has navigated volatile rates adeptly so far this year, the situation has caught several peers off guard, including a trio of midsized lenders that collapsed after deposit runs.
Bank stocks plunged last month after the Federal Reserve signaled it would keep interest rates higher for longer than expected to fight inflation amid unexpectedly robust economic growth. The 10-year Treasury yield, a key figure for long-term rates, jumped 74 basis points in the third quarter. One basis point equals one-hundredth of a percentage point.
Higher rates hit banks in several ways. The industry has been forced to pay up for deposits as customers shift holdings into higher-yielding instruments like money market funds. Rising yields mean the bonds owned by banks fall in value, creating unrealized losses that pressure capital levels. And higher borrowing costs tamp down demand for mortgages and corporate loans.
Banks including JPMorgan have also been setting aside more funds for anticipated loan losses.
Wall Street may provide little help this quarter, with investment banking fees likely to remain subdued and trading revenue expected to be flat or down slightly.
Finally, analysts will want to hear what CEO Jamie Dimon has to say about the economy and his expectations for the banking industry. Dimon has been vocal in his opposition against proposed increases in capital requirements.
Shares of JPMorgan have climbed 8.7% year to date, far outperforming the 19% decline of the KBW Bank Index.
A shopper leaves a Nike store along the Magnificent Mile shopping district with a purchase in Chicago, Dec. 21, 2022.
Scott Olson | Getty Images
Nike reported revenue Thursday that fell short of Wall Street’s revenue expectations for the first time in two years, but it beat on earnings and gross margin estimates.
Here’s how the sneaker giant performed during its fiscal first quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:
Earnings per share: 94 cents vs. 75 cents expected
Revenue: $12.94 billion vs. $12.98 billion expected
The company’s reported net income for the three-month period that ended August 31 was $1.45 billion, or 94 cents per share, compared with $1.47 billion, or 93 cents per share, a year earlier.
Sales rose to $12.94 billion, up about 2% from $12.69 billion a year earlier.
Nike shares rose by about 1% in extended trading Thursday.
Investors have been laser focused on Nike’s recovery in China, its relationship with its wholesale partners and how the resumption of student loan payments will impact sales.
They’re also keen to see Nike’s margins recover after bloated inventories, high promotions and supply chain woes contributed to lower profits over the last few quarters.
During the quarter, Nike’s gross margin fell about 1 percentage point to 44.2%, but it was higher than the 43.7% analysts had expected, according to StreetAccount.
Sales in China grew by 5% compared to the year-ago period to $1.74 billion, which fell short of the $1.84 billion analysts had expected, according to StreetAccount.
During the previous quarter ended May 31, Nike saw China sales jump 16% compared to the year-ago period. But the numbers were against easy comparisons because the region was still under Covid-related lockdown orders during the prior year.
While Nike remains bullish on China, the region’s economic recovery has so far been a mixed bag. Following a sluggish July, retail sales picked up during the month of August to rise 4.6% compared to the prior year, beating expectations of a 3% growth forecast by Reuters.
When it comes to its wholesale revenues, Nike’s relationship with those partners have been rocky. As the company has pivoted to a direct-to-consumer model, it has focused on driving sales online and in its stores at the expense of its wholesale accounts.
However, as Nike grappled with excess inventories throughout 2023, it relied on those partners to move through that merchandise. It has now restored its relationship with both Macy’s and DSW – accounts that it previously cut in favor of its DTC strategy.
Some analysts expected Nike’s wholesale revenue to be sluggish during the quarter because excess inventories have been a problem throughout the retail industry – and some wholesalers are being more particular in what they order to avoid another backlog.
Wholesale revenue during the quarter was flat compared to the year-ago period at $7 billion.
Amid decades-high inflation rates, consumers have been pulling back on apparel and footwear. With the resumption of student loan payments looming ahead, some analysts expect those sectors to take an even greater hit.
Jefferies conducted a survey on U.S. consumer spending and found 54% of respondents plan to spend less on apparel and accessories. Meanwhile, 46% plan to spend less on footwear, which doesn’t bode well for Nike.
It may still be too early to gauge the impact of student loan payments on Nike. Its first quarter ended in late August, and payments aren’t set to resume until October.
Members of the Writers Guild of America and the Screen Actors Guild walk the picket line outside of Disney Studios in Burbank, California, on July 18, 2023.
Robyn Beck | AFP | Getty Images
When the markets close Wednesday, all eyes will be on Bob Iger.
The Disney CEO has a laundry list of issues to address during the company’s fiscal third-quarter earnings call.
Linear advertising and television subscriptions are down, its movie studio has been hit or miss at the box office, Hollywood’s actors and writers are on strike and streaming losses continue to escalate.
Iger has hinted that Disney’s TV networks, excluding ESPN — which has been searching for strategic partners and on Tuesday announced a sportsbook partnership with Penn Entertainment — “may not be core” to the business anymore.
Here is what analysts expect from Disney’s quarterly report:
EPS: 95 cents per share expected, according to a Refinitiv consensus survey
Revenue: $22.5 billion expected, according to Refinitiv
Disney+ total subscriptions: 151.1 million expected, according to StreetAccount
Ahead of Disney’s earnings call, investors are looking for more clarity on how Iger plans to fix Disney’s TV business and juggle the decline of subscribers at Disney+.
Separately, Iger is lookin to take full control of Hulu, which Disney shares ownership of with Comcast. Buying out the remaining one-third stake is expected to cost at least $9 billion before negotiations.
The only bright spot for Disney appears to be its theme park division, which has more than rebounded after pandemic-related closures and is expected to post revenue of around $8.1 billion, a nearly 10% jump year over year, according to StreetAccount estimates.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC.
This is breaking news. Please check back for updates.
HSBC’s net profit more than doubled to $18.1 billion in the six months ended June, a sharp spike compared to the $9 billion in the same period a year before.
The bank’s profit before tax rose 147% year-on-year to $21.7 billion, up from $8.78 billion in the first half of 2022.
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This figure included a $2.1 billion reversal of an impairment relating to the planned sale of its retail banking operations in France, as well as a provisional gain of $1.5 billion on the acquisition of Silicon Valley Bank UK.
In light of the strong results, HSBC’s board approved a second interim dividend of $0.10 per share, and announced a further share buyback of up to $2 billion, which “we expect to commence shortly and complete within three months.”
An HSBC Holdings bank branch in Hong Kong on May 24, 2022. A Hong Kong-based trade platform launched by HSBC Holdings three years ago with much fanfare has shut down after failing to build a commercially viable business.
Bertha Wang | Bloomberg | Getty Images
Asked when the bank’s dividend might return to pre-pandemic levels, CEO Noel Quinn told CNBC’s “Capital Connection” that “if all goes to plan this year, we should be above our pre-pandemic dividend level.”
HSBC paid out a total dividend of $0.51 in 2018, and $0.30 in 2019.
For 2022, the bank has already declared two interim dividends of $0.10 each, bringing the total amount of dividends paid to $0.20. Quinn said that “our final interim dividend at the end of the year, will be the balance to get us to a 50% payout ratio.”
In March, the U.K. arm of HSBC — Europe’s largest bank by assets — bought SVB U.K. for £1 ($1.21), in a deal that excludes the assets and liabilities of SVB U.K.’s parent company.
Revenue increased by 50% year-on-year to $36.9 billion in the first half, which HSBC said was driven by higher net interest income across all its global businesses due to interest rate rises.
My job is to diversify the revenue. And I believe we’re starting to show evidence of that and we will continue to invest for diversification of revenue.
Noel Quinn
CEO of HSBC Holdings
Net interest income for the first half stood at $18.3 billion, 36% higher year-on-year, while net interest margin came in 46 basis points higher at 1.70%.
The strong performance was due to strong revenue growth across all business lines and all product areas, the CEO said. “Certainly, there’s an element of interest rates in there. But there’s also good growth in our fee income and trading income.”
For the second quarter alone, HSBC beat analysts’ expectations to report an 89% jump in pre-tax profit in the second quarter.
Pre-tax profit for the quarter ended in June was $8.77 billion, beating expectations of $7.96 billion.
Net profit was $6.64 billion, beating the $6.35 billion expected in analysts’ estimates compiled by the bank, jumping 27% compared to the same period a year before.
Total revenue for the second quarter came in at $16.71 billion, 38% higher than the $12.1 billion seen in the same period a year ago.
HSBC’s Hong Kong-listed shares rose 1.23% after the announcement.
Here are other highlights of the bank’s financial report card:
Net interest income came in at $9.3 billion in the second quarter, compared to $6.9 billion in the same period a year ago.
Net interest margin, a measure of lending profitability, rose 43 basis points year on year to 1.72% in the second quarter of 2023.
Moving forward, HSBC has also raised a key performance target, forecasting a near term return on tangible equity of 12%, compared to its previous target of 9.9%.
In fact, Quinn said that in the next two years, HSBC is expecting a “mid-teens” return on tangible equity, adding that “this is a broad-based delivery of profit and return.”
He sees future growth for HSBC coming from corporate banking, as well as international wealth and international retail banking for the affluent.
“We’re investing in areas that will drive growth beyond the interest rate regime there exists today. My job is to diversify the revenue. And I believe we’re starting to show evidence of that and we will continue to invest for diversification of revenue.”
Correction: This story has been updated to reflect that net interest margin rose 43 basis points in the second quarter of 2023. An earlier version misstated the year.
Microsoft shares slipped 1% in extended trading on Tuesday after the software maker issued fiscal fourth quarter earnings.
Here’s how the company did:
Earnings: $2.69 per share, vs. $2.55 per share as expected by Refinitiv.
Revenue: $56.19 billion, vs. $55.47 billion as expected by Refinitiv.
Revenue rose 8% year over year in the quarter, which ended on June 30, according to a statement. Growth has come in under 10% for three consecutive quarters for the first time since 2017. Net income totaled $20.08 billion, compared with $16.74 billion in the year-ago quarter.
Microsoft’s Intelligent Cloud segment contributed $23.99 billion in revenue, up 15% and above the $23.79 billion consensus of analysts surveyed by StreetAccount. The unit comprises the Azure public cloud, SQL Server, Windows Server, Visual Studio, Nuance, GitHub and enterprise services.
Azure revenue grew 26% during the quarter, compared with 27% growth in the previous quarter and 40% in the year-ago quarter. Analysts polled by CNBC and by StreetAccount had expected 25% growth from Azure, which competes with Amazon Web Services and Google Cloud Platform. Microsoft doesn’t report Azure revenue in dollars. Google parent Alphabet said Tuesday that revenue from its cloud products, which includes Google Workspace productivity apps in addition to Google Cloud Platform, increased by 28%.
Prompted by concerns about a worsening economy, organizations using cloud services from Microsoft, Amazon and Google have taken time to adjust their existing workloads to reduce costs in the past several months. At the same time, these three prominent U.S. cloud providers have trimmed their own expenses.
For the first time since 2016, Microsoft’s research and development costs declined year over year. In May Microsoft CEO Satya Nadella told employees that the company won’t lift salaries this year. On July 10 Nadella issued a memo about a fresh round of job cuts separate from the round of layoffs affecting 10,000 workers that kicked off in January.
Microsoft’s Productivity and Business Processes segment that contains Office productivity software, LinkedIn and Dynamics delivered $18.29 billion in revenue, up 10% and more than the StreetAccount consensus of $18.06 billion.
The company’s More Personal Computing business, which contains the Windows operating system, devices, gaming and search advertising, posted $13.91 billion in revenue. That figure indicates a decline of about 4%, yet it still topped the $13.58 billion StreetAccount consensus.
Sales of Windows licenses to device makers decreased by 12%. Consumers and companies rushed to buy PCs after the onset of Covid, making comparisons difficult for the past year. Technology industry researcher Gartner estimated that PC shipments, including Apple’s MacBooks, fell about 17% during the quarter.
Microsoft and Alphabet kicked off earnings season for the mega-cap tech companies. Investors will be looking at the big tech companies for updates on cost-cutting measures implemented earlier in the year and the impact of artificial intelligence investments on profitability. Alphabet on Tuesday surpassed estimates, lifting the stock in after-hours trading. Meta reports results on Wednesday, followed by Amazon and Apple next week.
Investors are eager for resolution in Microsoft’s arrangement to buy Activision Blizzard for almost $69 billion, which was agreed upon in January 2022. Earlier this month, an appeals court denied the Federal Trade Commission’s motion to stop the transaction. Activision shares have climbed past $92.50, close to the $95 that Microsoft agreed to pay, reflecting optimism that the deal is on track to close.
The company said its operating expenses rose about 2% in the quarter, partly because of a charge to pay a fine from Ireland’s Data Protection Commission after the authority looked at whether the company’s LinkedIn unit violated the European Union’s General Data Protection Regulation.
During the quarter, Microsoft built on its broad alliance with OpenAI to capitalize on fresh interest in artificial intelligence, following the November launch of the startup’s ChatGPT chatbot. Microsoft introduced a chatbot powered partly by OpenAI language models to help workers make sense of their employers’ data, and it told developers they’ll be able to build plugins that people can access through ChatGPT, the Bing search engine’s chatbot, and other tools.
Excluding the after-hours move, Microsoft shares have gained 46% year to date, while the S&P 500 is up 19%.
Executives will discuss the results with analysts and issue guidance on a conference call starting at 5:30 p.m. ET.
This is breaking news. Please check back for updates.
— CNBC’s Todd Haselton contributed to this report.
Chief Executive Officer of SpaceX and Tesla and owner of Twitter, Elon Musk attends the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition centre on June 16, 2023 in Paris, France.
Chesnot | Getty Images
Tesla reported earnings after the bell, showing a record for quarterly revenue but lower margins thanks to price cuts and incentives. The stock price is essentially unchanged in after-hours trading.
Revenue: $24.93 billion, versus $24.47 billion expected according to Refinitiv.
Earnings: 91 cents per share adjusted, versus 82 cents per share expected as per Refinitiv.
Net income (GAAP) was $2.70 billion, an increase of 20% from last year. Operating income, however, was off 3% from the year-ago quarter at $2.40 billion.
By way of comparison, during the first quarter of 2023, Tesla reported net income of $2.51 billion on revenue of $23.33 billion. During the second quarter last year, Tesla reported net income of $2.27 billion on $16.93 billion in revenue.
On the company’s earnings call, CEO Elon Musk said, “We continue to target 1.8 million vehicle deliveries this year, but expect Q3 production will be a little bit down because we’ve got summer shutdowns for a lot of factory upgrades.”
Early this month, Tesla reported 466,140 total vehicle deliveries for the second quarter and said it had produced 479,700 electric vehicles. Deliveries are the closest approximation of sales that Tesla reports.
Those deliveries were higher than Wall Street expected, and were partly driven by incentives and discounts. Correspondingly, operating margins came in at 9.6%, the lowest for at least the last five quarters. Total gross margin came in at 18.2%, also a low for the same period.
Tesla explained in a shareholder deck that its lower margins in the second quarter resulted from reduced average sales prices “due to mix and pricing” of the cars it has been selling, and the cost of ramping up production of battery cells it designed in-house, known as the 4680 cells, among other factors.
Revenue from Tesla’s core automotive business rose 46% year-over-year to $21.27 billion, about a 6.5% increase sequentially. Its energy generation and storage revenue — from solar installations, and backup batteries — rose 74% year-over-year to $1.51 billion. With more vehicles on the road, Tesla’s “services and other” revenue, including fees for out-of-warranty vehicle repairs, rose 47% to $2.15 billion.
Tesla’s research and development costs rose to $943 million (from $771 million in the first quarter) with the company writing in a shareholder deck that it is focused on “being at the forefront of AI development,” and has started production of its Dojo “training computers.”
Tesla’s crossover, the Model Y, became the best-selling vehicle worldwide in the first quarter of 2023.
Tesla said in an investor deck that Cybertruck “factory tooling” is on track but the company is only producing “release candidate” builds so far. The news could disappoint fans who are eagerly awaiting start of deliveries of the angular, sci-fi inspired pickup that Elon Musk first promoted in 2019. In recent days, Tesla posted a photo via its social media account on Twitter showing factory workers crowded in around a Cybertruck in their Austin, Texas facility. The tweet said, “First Cybertruck built at Giga Texas!”
On the earnings call, Musk that the Cybertruck would include lots of “new technology,” with 10,000 “unique parts and processes.” Giving the caveat that it is “always difficult to predict the ramp initially,” Tesla will be making the Cybertruck, “in high volume next year, and we will be delivering the car this year.”
Musk also said Tesla will be spending more than $1 billion on Dojo over the next year. Dojo is a supercomputer that Tesla is developing for AI machine learning and computer vision training purposes. Tesla hoovers up video clips and data from its customers’ and company vehicles to improve existing software, and to develop new features that become part of its driver assistance systems.
“You see a lot of AI companies doing you know LLMs and what not and I’m thinking, if they’re so great why can’t they make a self-driving car? Because it’s harder!”
Musk has been promising Tesla would deliver a self-driving car since at least 2016, and at that time promised a Tesla would be able to complete a cross-country trip with no driver intervention in 2017. So far, that still hasn’t happened. The company’s driver assistance systems, marketed as Autopilot or Full Self-Driving capability in the US, requires a human driver ready to steer or brake at any time.
More futuristically, Musk spoke about combining a Neuralink brain implant with a robotic arm or leg made by Tesla. Speaking of amputees, he said, “We believe we can give [them] a cyborg body that is incredibly capable — six-million-dollar man in real life, but it won’t cost six million dollars.” He joked, “Sixteen-thousand-dollar man.”
Goldman Sachs on Wednesday posted profit below analysts’ expectations amid write-downs tied to commercial real estate and the sale of its GreenSky lending unit.
Here’s what the company reported:
Earnings: $3.08 a share vs. $3.18 a share Refinitiv estimate
Revenue: $10.9 billion, vs. $10.84 billion estimate
Second-quarter profit fell 58% to $1.22 billion, or $3.08 a share, on steep declines in trading and investment banking and losses related to GreenSky and legacy investments, which sapped about $3.95 from per share earnings. Revenue fell 8% to $10.9 billion.
The company disclosed a $504 million impairment tied to GreenSky and $485 million in real estate write-downs. Those charges flowed through its operating expenses line, which grew 12% to $8.54 billion.
Shares of the bank climbed less than 1%.
Goldman CEO David Solomon faces a tough environment for his most important businesses as a slump in investment banking and trading activity drags on. On top of that, Goldman had warned investors of write-downs on commercial real estate and impairments tied to its planned sale of fintech unit GreenSky.
Unlike more diversified rivals, Goldman gets the majority of its revenue from volatile Wall Street activities, including trading and investment banking. That can lead to outsized returns during boom times and underperformance when markets don’t cooperate.
Exacerbating the situation, Solomon has spent the past few quarters retrenching from his ill-fated push into consumer banking, which has triggered expenses tied to shrinking the business.
“This quarter reflects continued strategic execution of our goals,” Solomon said in the earnings release. “I remain fully confident that continued execution will enable us to deliver on our through-the-cycle return targets and create significant value for shareholders.”
The bank put up a paltry 4.4% return on average tangible common shareholder equity in the quarter, a key performance metric. That is far below both its own target of at least 15% and competitors’ results including JPMorgan Chase and Morgan Stanley, which put up returns of 25% and 12.1% respectively.
Trading and investment banking have been weak lately because of subdued activity and IPOs amid the Federal Reserve’s interest rate increases. But rival JPMorgan posted better-than-expected trading and banking results last week, saying that activity improved late in the quarter, and that raised hopes that Goldman might exceed expectations.
Goldman’s results “reflect the limitations of a business mix that relies more heavily on investment banking and principal investments,” David Fanger of Moody’s Investors Service said in an e-mailed statement. “When client activity remains weak and higher interest rates are pressuring valuations, earnings decline more than at a bank with higher recurring revenues.”
Fixed income trading revenue fell 26% to $2.71 billion, just under the $2.78 billion estimate of analysts surveyed by FactSet. Equities trading revenue was essentially unchanged from a year earlier at $2.97 billion, topping the $2.42 billion estimate.
Investment banking fees fell 20% to $1.43 billion, just below the $1.49 billion estimate.
Asset and wealth management revenue fell 4% to $3.05 billion as the firm booked losses in equity investments and lower incentive fees.
Analysts will likely ask Solomon about updates to his plan to exit consumer banking. Goldman has reportedly been in discussions to offload its Apple Card business to American Express, but it’s unclear how far those talks have advanced.
Goldman shares have dipped nearly 2% this year before Wednesday, compared with the approximately 18% decline of the KBW Bank Index.
Brian Moynihan, CEO of Bank of America Corp., during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington, D.C., Sept. 22, 2022.
Al Drago | Bloomberg | Getty Images
Bank of America on Tuesday posted second-quarter profit and revenue that edged out expectations as the company reaped more interest income amid higher rates.
Here’s what Bank of America reported:
Earnings: 88 cents a share vs. 84 cents a share Refinitiv estimate
Revenue: $25.33 billion vs. expected $25.05 billion
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The bank said earnings rose 19% to $7.41 billion, or 88 cents a share, from $6.25 billion, or 73 cents a share, a year earlier. Revenue climbed 11% to $25.33 billion, fueled by a 14% jump in net interest income to $14.2 billion, essentially matching the expectation of analysts surveyed by FactSet.
“We continue to see a healthy U.S. economy that is growing at a slower pace, with a resilient job market,” CEO Brian Moynihan said in the release. “Continued organic client growth and client activity across our businesses complemented beneficial impacts of higher interest rates.”
Bank of America shares climbed more than 4%.
The company’s Wall Street operations helped it top revenue expectations in the quarter. Fixed income trading revenue jumped 18% to $2.8 billion, edging out the $2.77 billion estimate, and equities trading slipped 2% to $1.6 billion, topping the $1.48 billion estimate.
Bank of America was expected to be one of the top beneficiaries of rising interest rates this year, but it hasn’t played out that way. The company’s net interest income, one of the main drivers of a bank’s revenue, has been questioned lately as loan and deposit growth has slowed. Last week, rival JPMorgan Chase posted a far stronger jump in net interest income that helped fuel a 67% surge in quarterly profit.
Still, CFO Alistair Borthwick told analysts Tuesday that net interest income would be slightly above $57 billion for the year, reaffirming the bank’s previous guidance.
BofA shares declined about 11% this year before Tuesday, compared with the approximately 20% decline of the KBW Bank Index.
This month, the Consumer Financial Protection Bureau said it fined the Charlotte, North Carolina-based bank for customer abuses including fake accounts and bogus fees. Analysts may ask Moynihan if the problems have been resolved.
