The second quarter of 2021 has just come to an end which means earnings season is here. On July 13, two banking giants part of the S&P 500 - JPMorgan (NYSE: JPM) and Goldman Sachs (NYSE: GS) reported their quarterly results, and let’s see how each of them has performed.
JPMorgan earnings more than double in fiscal Q2
JPMorgan reported its fiscal second quarter of 2021 earnings (ended in March) and disclosed earnings per share at $3.78 in the quarter with revenue of $30.5 billion. Wall Street forecast the banking heavyweight to report earnings of $3.05 and revenue of $29.98 billion in Q2. JPMorgan explained it released around $3 billion from provision for credit losses which significantly boosted its earnings in the March quarter.
JPM’s trading revenue stood at $6.8 billion, indicating a year-over-year rise of 12% while fixed-income sales were down 44% compared to Q2 of fiscal 2020. The company’s trading revenue was forecast at just $6 billion by the management team, compared to $9 billion in Q1 of 2021.
Comparatively, JPMorgan’s community banking sales were up 3% at $12.8 billion and investment banking grew 1% year over year to $3.4 billion. One of the top-performing verticals was wealth management which saw a jump of 20% to $4.1 billion while commercial banking sales increased 3% to $2.5 billion in Q2.
JPMorgan has been one of the top performers on the S&P 500 and has outperformed the index since the bear market of 2008-09. JPM stock has gained 418% in the last decade and is up 183% in the last five years. It has returned 64% to shareholders in the last 12-months. Comparatively, the S&P 500 is up 40% in the last year, 122% in the last five years, and 302% in the last decade.
In terms of assets, JPMorgan is the largest bank in the U.S. With spending returning to pre-pandemic levels, investors can expect JPMorgan to continue to outperform peers in the upcoming year as well.
During the company’s earnings call, JPM CEO Jeremy Barnum said, “we are encouraged by the continued progress against the virus and the economic recovery that is underway, especially in the United States, although we want to acknowledge the challenges that much of the rest of the world is facing, and we're hopeful that a global recovery will follow closely behind.”
He added, “Our performance this quarter once again showcases the power of our diversified business model as headwinds in NII from consumer deleveraging are offset by strong fee generation across AWM and CIB and exceptionally low net charge-offs across the board.
Goldman Sachs reported revenue of $15.39 billion
In Q1, Goldman Sachs reported revenue of $15.39 billion and adjusted earnings stood at $15.02. Wall Street forecast revenue at $11.46 billion and earnings per share of $9.57. The bank released over $90 million from credit reserves.
Its investment banking sales rose 36% year over year to $3.61 billion primarily due to a surging IPO market. Its fixed income sales grew 45% to $2.3 billion but equity trading revenue fell 12% to $2.6 billion. Overall trading sales fell to $4.9 billion in Q1 compared to $7.6 billion in the prior-year period.
This was offset by strong management sales that more than doubled to over $5 billion. Wealth management sales also grew by a healthy 28% to $1.75 billion.
Compared to JPM, Goldman Sachs has trailed the S&P 500 in the last 10 years as GS stock is up 238% and it has gained 159% in the last five years. Since July 2020, Goldman Sachs stock is up 83%.
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