Beating the Odds: Banks and Brokerages Report Stronger-Than-Expected Earnings

by on Aug 07, 2017

Big banks and brokerages are celebrating their quarterly earnings reports. But how they’re communicating their successes to investors says a lot more than the numbers themselves. Bank of America, Citigroup, Goldman Sachs, J.P. Morgan, Morgan Stanley and Wells Fargo all beat their estimated earnings, marking the current optimistic sentiment that’s resulted from rising interest rates and the pro-business, antiregulation environment. TD Ameritrade and Charles Schwab also outperformed, breaking their earnings and revenue records. All these firms also beat or matched their quarterly revenue from Q2 2016. A year ago, with extremely low interest rates, volatile politics and a wavering unemployment rate, one could not predict these results.

To demonstrate their confidence and discuss the reasons behind their success, the firms all promoted their results through press releases posted to their public sites. Five firms—BofA, Goldman, J.P. Morgan, Wells Fargo and TD—also held public conference calls discussing their Q2 results, demonstrating a trend toward transparency. BofA, Citigroup, Morgan Stanley and TD stand apart by offering complete, branded reports and supplemental documents sharing concrete results and in-depth analyses, all publicly available. Most firms’ plain-text press releases, on the other hand, provide limited analysis and lackluster tables.

Bank of America’s press release offers links to a comprehensive and digestible report of the firm’s Q2 highlights as well as an investor presentation and an in-depth supplemental document, all available in branded PDFs and featuring concrete numbers with corresponding graphs and charts. The report clearly outlines the numbers and provides complementary descriptions and quotes from the firm’s CEO—“We had one of the strongest quarters in our history” —and CFO—“Client activity remained strong across the franchise.” A live audio webcast presentation discussed earnings and offered corresponding materials. Overall, Bank of America stands apart for its concise financial reporting and use of visual aids.

Bank of America Press Release (Truncated)

TD Ameritrade’s relatively standard press release includes insightful commentary by the firm’s top executives. The EVP and CFO discussed increased interest rates and the firm’s organic growth, likely of interest to investors. TD stands out for its detailed presentation featuring the firm’s corporate color scheme, large eye-catching text and clear graphs. It is one of the only firms to offer a transcript of its conference call, a helpful feature.

TD Ameritrade Presentation Slide

Citigroup’s press release clearly displays its Q2 earnings in bright blue boxes, lists highlights in bulleted form and links to the full PDF and comprehensive financial supplement. The press release, while a bit text heavy, features large tables and CEO commentary on how the firm is “on course to increase both the return on capital and return of capital for its shareholders.” Morgan Stanley’s press release links to a corresponding webcast and full PDF. Employing the corporate color scheme, it offers a useful financial overview, CEO commentary, key points and a performance overview of the firm’s different segments like institutional securities and wealth management.