Best & Worst Broker-Dealers: Q1 Earnings, 2023

The past quarter brought a lot of stock-price volatility to the financial services sector, as troubles at Silicon Valley Bank, which failed March 10, affected many firms — big and small. Still, the S&P 500 rose 7.5% in Q1, while the Nasdaq soared 17%.

Also during the period, broker-dealers reported mixed earnings: Seven posted positive results, while five announced year-over year profit declines. Wells Fargo’s earnings report for Q1 — like that of Morgan Stanley — no longer includes the number of its financial advisors.

UBS had a sizable drop in earnings, but also saw growth in its fee-based assets and inflows of net new money in the Global Wealth Management and Asset Management unit. With its planned acquisition of Credit Suisse, announced March 19, the bank expects to “reinforce [its] position as a leading and truly global wealth manager with strategic scale and complementary capabilities in the most attractive growth markets,” according to CEO Sergio Ermotti.

JPMorgan had positive growth in its year-over-year Q1 earnings, which it reported in mid-April, about two weeks ahead of its move to buy First Republic Bank. Its Asset & Wealth Management business had long-term inflows of $47 billion, while Consumer & Community Banking saw its debit and credit card sales jump 10% and card loans 21%.

“The U.S. economy continues to be on generally healthy footings … ,” said JPMorgan Chairman and CEO Jamie Dimon in a statement about its Q1 results. “However, the storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks.”

Dimon noted that the banking situation in 2023 “is distinct from 2008 as it has involved far fewer financial players and fewer issues that need to be resolved, but financial conditions will likely tighten as lenders become more conservative, and we do not know if this will slow consumer spending.”

Overall in the first quarter, S&P 500 companies recorded their best performance relative to analyst expectations since Q4 2021, according to FactSet Research. “Both the number of companies reporting positive EPS surprises and the magnitude of these earnings surprises are above their 10-year averages,” it said.

Financial firms kick off the second-quarter earnings season on July 12, when JPMorgan plans to report its latest results.

(Image: Chris Nicholls/ALM)