The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how diversified banks stocks fared in Q3, starting with Citigroup (NYSE: C).
At their core, diversified banks take in deposits and engage in various forms of lending, which means revenue is generated through interest rate spreads (difference between loan and deposit rates) and fees. Other revenue comes from adjacent services such as wealth management, card and account fees, and products such as annuities. These institutions benefit from rising interest rates that improve NIMs (net interest margins), digital transformation reducing operational costs, and expanding wealth management services as populations age. However, they face headwinds including fintech competition disrupting traditional models (how disruptive is crypto?), stringent regulatory requirements increasing compliance costs, and cybersecurity threats requiring substantial technology investments. Economic downturns also pose risks through potential loan defaults and compressed margins during accommodative monetary policy periods.
The 7 diversified banks stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.4%.
In light of this news, share prices of the companies have held steady as they are up 4.1% on average since the latest earnings results.
Best Q3: Citigroup (NYSE: C)
With operations in nearly 160 countries and a history dating back to 1812, Citigroup (NYSE: C) is a global financial services company that provides banking, investment, wealth management, and payment solutions to consumers, corporations, and governments.
Citigroup reported revenues of $22.09 billion, up 9.3% year on year. This print exceeded analysts’ expectations by 4.6%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ revenue estimates and a beat of analysts’ EPS estimates.
Citigroup achieved the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 5.2% since reporting and currently trades at $101.10.
Is now the time to buy Citigroup? Access our full analysis of the earnings results here, it’s free for active Edge members.
Bank of America (NYSE: BAC)
Tracing its roots back to 1784 and now serving approximately 67 million consumer and small business clients, Bank of America (NYSE: BAC) is a global financial institution that provides banking, investing, asset management, and risk management products and services to individuals, businesses, and governments.
Bank of America reported revenues of $28.09 billion, up 10.8% year on year, outperforming analysts’ expectations by 1.8%. The business had a strong quarter with a beat of analysts’ EPS estimates and a decent beat of analysts’ revenue estimates.
Bank of America delivered the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 6% since reporting. It currently trades at $53.04.
Is now the time to buy Bank of America? Access our full analysis of the earnings results here, it’s free for active Edge members.
Slowest Q3: Truist Financial (NYSE: TFC)
Born from the 2019 merger of BB&T and SunTrust in one of the largest banking combinations since the 2008 financial crisis, Truist Financial (NYSE: TFC) is a bank holding company that offers a wide range of financial services including consumer and commercial banking, wealth management, insurance, and lending solutions.
Truist Financial reported revenues of $5.19 billion, flat year on year, exceeding analysts’ expectations by 0.7%. Still, it was a mixed quarter as it posted a slight miss of analysts’ net interest income estimates.
Truist Financial delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 8.7% since the results and currently trades at $44.63.
Read our full analysis of Truist Financial’s results here.
Wells Fargo (NYSE: WFC)
Founded during the California Gold Rush in 1852 to provide banking and express delivery services to miners and merchants, Wells Fargo (NYSE: WFC) is a diversified financial services company that provides banking, lending, investment, and wealth management services to individuals and businesses.
Wells Fargo reported revenues of $21.44 billion, up 5.3% year on year. This number beat analysts’ expectations by 1.5%. More broadly, it was a satisfactory quarter as it also recorded a beat of analysts’ EPS estimates but a slight miss of analysts’ net interest income estimates.
The stock is up 10.4% since reporting and currently trades at $87.10.
Read our full, actionable report on Wells Fargo here, it’s free for active Edge members.
U.S. Bancorp (NYSE: USB)
With roots dating back to 1863 and a presence across 26 states primarily in the Midwest and West, U.S. Bancorp (NYSE: USB) is one of America's largest banks providing lending, deposit services, wealth management, payment processing, and merchant services to individuals and businesses.
U.S. Bancorp reported revenues of $7.3 billion, up 6.8% year on year. This print surpassed analysts’ expectations by 2.1%. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ net interest income estimates and a solid beat of analysts’ revenue estimates.
The stock is up 2.4% since reporting and currently trades at $47.62.
Read our full, actionable report on U.S. Bancorp here, it’s free for active Edge members.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
