October 13, 2017 / 6:29 PM / a year ago

FACTBOX-U.S. banks beat profit estimates despite trading slump

Oct 13 (Reuters) - Four of the six biggest U.S. banks have reported third-quarter earnings so far, with profits topping Wall Street estimates on higher interest rates and loan growth but trading continued to remain a dark spot.

Several large U.S. banks had warned last month that revenue from trading stocks and bonds would take a hit in the third quarter due to a slump in volatility.

Goldman Sachs Group Inc and arch rival Morgan Stanley , which get a large chunk of their revenue from fixed-income and stock trading, will report results on Tuesday.

A snapshot of the earnings of the four banks that reported on Thursday and Friday:

JPMorgan Chase & Co

* Earnings (beat) - $1.76/shr vs est $1.65

* Revenue (beat) - $25.33 bln vs est $25.23 bln

* Story - reut.rs/2yf7etd

* Helped by:- Average loan balances, up 7 pct- Net interest income, up 10 pct

* Hurt by:- Trading revenue, down 21.24 pct- Bond trading revenue down 27 pct

* Executive comment:- Marianne Lake, CFO: - Fourth quarter markets revenue likely to be lower compared to same period last year- On tax reform: “So many uncertainties it’s almost talking about hypotheticals at this point”- Sapphire Reserve credit card attrition numbers so far are “very encouraging”

* Analyst comments:- Credit Suisse: JP Morgan Q3 results “straightforward, solid and positive”- Betsy Graseck, Morgan Stanley: This is exciting! We are going to start talking about the value of deposits again… for the first time in 10 years- Jim Sinegal, Morningstar Inc: Results were solid, but not exceptional Citigroup:

* Earnings (beat) - $1.42 vs est $1.32

* Revenue (beat) - $18.17 bln vs est $17.90 bln

* Story - reut.rs/2z4SdXP

* Helped by:- Smaller-than-expected decline in trading revenue; down 11 pct vs expected 15 pct- Lower expenses; Down 2 pct vs year ago- Gain of $355 mln, worth 13 cents a share, from the previously disclosed sale of a fixed income market analytics and index business

* Hurt by:- Fixed income and equity trading revenues down 16 pct

* Executive comment:- Chief Financial Officer John Gersprach:”We all would anticipate greater loan growth if there was a bit more clarity as far as you know when or if tax reform was going to pass” Bank of America:

* Earnings (beat) - 48 cents vs est 45 cents

* Revenue (beat) - $22.08 bln vs est $21.98 bln

* Story - reut.rs/2gCbd9h

* Hurt by: - Trading revenue fell 15 pct

* Helped by:- Tight leash on costs; Q3 noninterest expense down 2.5 pct at $13.14 bln- Higher interest rates; Net interest income up 9.4 pct to $11.16 bln

* Executive comment:- Chief Financial Officer Paul Donofrio: “Tax reform is going to be great for the economy ... but I don’t think people are waiting around”

* Analyst comments:- Steven Chubak, Instinet:”On balance, Bank of America’s results stack up better than those of peers”

Wells Fargo & Co:

* Earnings (beat) - $1.04 vs est $1.03

* Revenue (miss) - $21.9 bln vs est. $22.4 bln

* 4th straight quarter of estimate miss

* Story - reut.rs/2ymh1Nt

* Hurt by: - Previously disclosed legal costs and a slump in mortgage banking income- Noninterest expenses up 8.2 pct to $14.35 bln

* Forecast:- Auto loans decline to likely bottom in second-half 2018- Revises 2017 efficiency ratio target upward to 61 pct due to lower-than-expected earning assets and higher costs, including cyber-defense

* Executive comments: - John Shrewsberry, CFO:Wells is committed to its plan to cut costs by $4 bln by the end of 2019, half of which will be reinvested into businesses.- John Shrewsberry, CFO: Credit card portfolio regaining momentum after impact of sales scandal- Tim Sloan, CEO:Attrition of employees in Wells Fargo’s community bank at lowest levels in 6 years

* Analyst comments:- Stephen Biggar, Argus Research: While mortgage banking has been slumping for most banks in recent quarters due to the rising interest rate environment, the 37 pct drop for WFC is more significant and I have to wonder whether the fallout from WFC’s sales practices is also impacting mortgage banking volume. Average loan growth did not keep pace with that of other banks reporting so far, and trust and investment fees declined (also unlike other banks), perhaps as the result of advisor loss to other banks. (Compiled by Aparajita Saxena and Nikhil Subba in Bengaluru)

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