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March madness, no not basketball but the US banks. The Q1 results were better than expected

March madness is usually  college basketball – this time the banks

March Madness is usually associated with college basketball. Congratulations to all the teams and the winners, UConn men’s and LSU women’s. The unusual edition of March madness in 2023 came to the bank sector. The collapse of Silicon Valley Bank started the turmoil.

march madness

This event on March 10 was the second largest in U.S. history. It didn’t stop there. The fear was real, and the contagion effect led to the collapse of a couple of other banks. Then there was the big one, Credit Suisse, and the 167-year history consumed by USB over a weekend in March.

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bank’s edition of March Madness

So, what led to the bank’s edition of March Madness? Then what did Q1 2023 results last week say? The collapse of the three banks in the U.S. and the long overdue demise of Credit Suisse. Were they related, and what happened? In U.S. banks, the core problem was, as usual, the assets, but not the usual culprit being bad loans.


No, it was classic interest rate mismanagement. SVB invested in U.S. treasuries, and as interest rates rose, these bonds lost value. This was something any well-run bank and the regulators should have noticed. Then managed the issue. It wasn’t. The “Accounting Fix” needs a fix. For more information, please click HERE.

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in the bank, where it is safe

The combined collapse of these banks added a lot of heat to the conversation. Why? Is your money safe in the bank? One thing we all have in common is that we all have banking relationships. Our banking relationship is one of our most sensitive. The events of the past couple of months combined with the events to come. They are and will emphasise the following premise. The whole banking system is based on the promise that depositors leave their money in the bank, where it is safe.

In reality, the contract in place is this. Above USD 250,000, you are an unsecured lender to a highly leveraged shop and receive a meager return. In a Bankruptcy Court, a depositor will stand in line with all other creditors. All are above-listed shareholders and Tier 1 bond holders. The arrangement to bail out Silicon Valley Bank depositors, all of them. Bar none. In effect, this action sets a precedent for making good on all deposits in the U.S.

Is this necessary to keep your money safe in the bank?


    1. Fix the Accounting Fix
    2. Mandate Hedging of Interest Rate Risk
    3. End the Shortening of Bank Stocks
    4. Increase Cash Reserves
    5. Eliminate Stock Options
    6. Regulation Review
    7. Increase Deposit Insurance

The Major U.S. Banks Earnings Reports

Following the drama of the March Madness event described above. The earnings reports from the U.S. Banks have been keenly anticipated. A repeat of the 2008 Global Financial Crisis was never on the cards. The underlying scenario was completely different. The deposit insurance system worked, and in fact, it worked well. As discussed above, there was a massive precedent set. Deposit insurance has to be addressed. Also, Enterprise Risk management must be dealt with at the corporate level. CFOs at companies like ROKU must do their job.
All in all, the first quarter results released by the major U.S. banks, which included around 20% of the S&P 500 Index, were good. There were a lot of positive features, the major banks increased profits. There was a steady demand for loans as business activity remained buoyant. Even as interest rates continued to rise and calls for a recession continued. In the end, five of the six largest banks exceeded expectations and the goals they set.
Let’s take a look.
JPMorgan’s (JPM) adjusted earnings for the first quarter of 2023 were $4.10 per share. This exceeded the consensus estimate of $3.40 per share. All driven by the consumer banking division, higher rates, and good loan demand. According to projections, earnings would amount to $3.20 per share. Net revenues came in at $38.3 billion. This was a YOY increase of 25% and exceeded the consensus estimate of $35.2 billion. Investors reacted positively to JPMorgan’s upgraded prediction for net interest income.
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Wells Fargo (WFC) EPS was $1.23, which was up 35% year over year and was higher than the consensus estimate of $1.14. This was due to an increase in net interest income (NII), rising rates, and strong average loan growth. The reduction in expenses not related to interest provided an extra boost.
There were several key aspects that undermined the WFC’s position. This included a poor performance in non-interest revenue, increased provisions. All this was due to a struggling mortgage sector in WFC’s market. The company’s quarterly revenues came in at $20.73 billion. This exceeded the consensus estimate of $20.06 billion. Also, the top line saw 17% growth from the same quarter a year ago.
Goldman Sachs (GS)
Goldman Sachs’ Q1-2023 EPS was $8.79, higher than the consensus estimate of $8.13. Projected estimates were $7.70 in profits. A much-improved performance compared to the poor Q4-2022 results reported in January. Compared to YOY, net revenues came in at $12.22 billion, a decline of 5%.
The top line came in lower than the $13.02 billion consensus estimate. According to our projections, revenues came in at $12.8 billion. Goldman Sachs is currently trading on a PE ratio of 6.70X, and a price-to-book (PB) ratio of 1.09X. The current ROA is 0.96%, and the ROE is 14.08%.

Bank of America (BAC) reported earnings of 94 cents per share for Q1 2023. The figure was higher than the consensus estimate of 80 cents. When compared to the 80 cents earned in the same quarter last year. Thus, favourable results on the bottom line. Two key aspects, the solid gain in net interest income and the robust trading performance. This came despite a decline in deposits and a worsening forecast for the economy. The company’s quarterly net revenues came in at $26.3 billion. The result was much higher than the consensus estimate of $25.05 billion. When compared to the same period the previous year, the top line increased by 13%.


Citigroup (C) reported Q1-2023 EPS of $1.86. This excludes divestiture-related impacts. The EPS reported was higher than the consensus estimate of $1.65. The Institutional Clients Group, Personal Banking, and Wealth Management segments were all strong. All made solid contributions to Citigroup’s revenue during the quarter.

The first-quarter revenues came in at $21.44 billion, a YOY increase of 12%. Top-line revenue came in higher than the $17.90 billion consensus estimate. Citigroup is currently trading at a PE ratio of 6.50X, a price-to-book (PB) ratio of 0.51X. The ROA is 0.55% and the ROE is 7.18%. Valuations are low, and so is profitability.

Morgan Stanley (MS)

Morgan Stanley (MS) reported an EPS of $1.70 for Q1-2023, higher than the consensus estimate of $1.66. The earnings forecast was $1.69. The poor performance of trading and investment banking weighed on investor sentiment. Quarterly net revenues came in at $14.52 billion, which is a 2% decrease from the same period the previous year. The top line came in higher than the $13.91 billion consensus estimate had anticipated. According to projections, total revenue was expected to be $13.47 billion.


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Warren William

Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: or Telegram +393339034488

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