Recent gains in the US stock market have led to market sentiment overshadowing earnings expectations, and this is reflected in the performance of JPMorgan Chase. Despite JPMorgan Chase's strong performance, its stock price has declined, serving as an example. According to the latest reports, observers have noted a 212% increase in short-selling transactions for JPMorgan Chase, indicating the entry of bearish traders. The first-quarter loan volume was only $13.1 trillion, below the expected $13.3 trillion, suggesting weakening demand for credit. JPMorgan Chase's return on equity (ROE) reached 17%, surpassing the expected 15.9%, demonstrating the bank's improving profitability. Costs increased by 13%, outpacing revenue growth, primarily due to the acquisition of two bankrupt banks, with a one-time expense of $725 million paid to the FDIC.
After seven consecutive quarters of growth, net interest income experienced a decline primarily due to a decrease in customer deposits. Banks need to offer higher interest rates to attract deposits and maintain net interest margins, but the yields on US bonds are higher than those on current deposits, leading to a shift of deposits towards other investments.
Overall, JPMorgan Chase's performance met expectations. Revenues grew by 9% both sequentially and year-on-year, while net profit increased by 44% sequentially and 6% year-on-year. Excluding the impact of the FRCB acquisition, revenues grew by 4% year-on-year, and net profit increased by 1% year-on-year. Loan loss provisions decreased by 32% sequentially and 17% year-on-year, indicating an improvement in the bank's credit situation.
However, despite the strong performance, JPMorgan Chase's stock price declined by 6.5%. Investors are concerned about excessive spending for the full year, which was reflected in the market reaction.
Wells Fargo faces similar issues, with an expected 7% to 9% decline in full-year net interest income. Weak loan demand and increased expenses, primarily due to additional FDIC insurance fees paid after last year's bank failures, are contributing factors.
Citigroup's situation is slightly different, as its performance exceeded expectations in terms of revenue, profit, and net interest income. Consumer credit card spending also showed strong growth, and management holds an optimistic outlook for the future. However, despite the positive performance, Citigroup's stock price opened 3% higher due to market sentiment but ultimately fell by 1.7%. This once again demonstrates the phenomenon of market sentiment outweighing performance factors.
Additionally, asset management giant BlackRock's performance also exceeded expectations, including revenue and profit. However, the market holds a critical view of the performance of net fund inflows, leading to a 2% increase in stock price at the opening but a 2.9% decline at the end of the day.