All four of the nation's biggest banks have now reported fourth-quarter earnings, which allows investors to get a sense for how well the bank industry held up in the final three months of last year. There were clear winners and losers, with Bank of America (NYSE: BAC) and JPMorgan Chase (NYSE: JPM) turning in stellar results, while Citigroup (NYSE: C) and Wells Fargo came up short of investor expectations.
To get a better sense for how three of these banks performed, listen in to the segment below ofIndustry Focus: Financials. In it, The Motley Fool's Michael Douglass and contributor John Maxfield explain the fourth-quarter results for Bank of America, JPMorgan Chase, and Citigroup.
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A full transcript follows the video.
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Michael Douglass:I'm going to go ahead and institute a 30-second rule. We're going to talk about three big banks and we're going to talk about each of them in 30 seconds. Sounds good?
John Maxfield:That sounds great.
Douglass:OK,let's talk specifically Bank of America, go.
Maxfield:Awesome quarter. $4.3 billion in net incomeapplicable to common stockholders. 50% better than the fourth quarters in theaverage of the four quarters in the three preceding years. That's great. They are boosted by trading revenue in particular. Going forward, they're going to earn a lot more money, to the point we made about interest rates, $600 million more per quarter this year, if everything else stays equal. However, the one thing that remains out there for Bank of America is that it still needs to get its profitability up. But, it's going in the right direction.
Douglass:Cool.JPMorgan. And,I'll go ahead and insert here, wow, what a barnburner of a quarter for them.
Maxfield:[laughs] Yeah. Monster quarter. I mean,JPMorgan Chase earned $6.7 billion. Let me put this in perspective. If you look at earningsover the last 12 months of all the companies on theS&P 500, only one company in the United States earns more money, that'sApple. So, what we're seeing now is the true value of the franchise that CEO Jamie Dimon has built. He built it in large part during the financial crisis by buying a number of other banks for pennies on the dollar. We're really starting to see that value come to fruition.
Maxfield:Citigroup had a really tough quarter. If you just look at its top-line revenue, it fell on a year-over-year basis. Anytime revenue falls on a year-over-year basis,that's not good, particularly when you consider thatCitigroup has substantial trading operations that also benefited from trading. So,the fact that they benefited from that, but everything else fell,was not a good sign. The one thing I would say about Citi thatshareholders should take note of is that the fourth quarter was the last time that it willseparately report the performance of Citi Holdings, which was the entity that it created after the financial crisis, and stuffed full of toxic non-core assets. So, it marks ademarcation point between Citiand the financial crisis that basically,going forward, it will be difficult to even tease out the impact of the financial crisis from Citi's financial statements any longer.
John Maxfield owns shares of Bank of America. Michael Douglass owns shares of Apple. The Motley Fool owns and recommends Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple.The Motley Fool has a disclosure policy.