JPMorgan, Wells Fargo, Citi stocks drop -2-

Citigroup Chief Financial Officer Mark Rowan said the bank is seeing signs that the U.S. will avoid a recession despite fresh worries on inflation this week.

"The chance of a soft landing is increasingly likely," Rowan said on a call with reporters.

While risks remain from geopolitical uncertainty, "the global economy appears to be resilient" even with slower growth, he said.

Consumer strength is holding up, while inflation is gradually "moving in the direction" that central banks around the world would like to see, he added.

Wells Fargo profit dips but revenue edges up

Wells Fargo's first-quarter net income fell to $4.619 billion, or $1.20 a share, from $4.991 billion, or $1.23 a share, in the year-earlier period. Revenue rose to $20.863 billion from $20.729 billion a year ago.

The FactSet consensus was for EPS of $1.06 and revenue of $20.195 billion.

Chief Executive Officer Charlie Scharf said the company's first-quarter revenue was boosted by an increase in noninterest income that more than offset an expected decline in NII amid a drop in loan activity.

NII fell to $12.23 billon from $13.34 billion a year ago, while noninterest income rose to $8.64 billion from $7.39 billion.

Noninterest income was boosted by improved results at the venture-capital business, higher investment-banking fees, an increase in asset-based fees at the wealth- and investment-management business and higher trading revenue.

The company's average consumer banking and lending was down 3% from the year-earlier period at $329.7 million, and was down 1% from the fourth quarter.

The bank's provision for loan losses was lowered to $938 million from $1.207 billion a year ago. The move was driven by a decrease in the allowance for credit losses driven by commercial real estate and car loans, which was partially offset by a higher allowance for credit-card loans.

Consumer, small and business banking was down 4%, driven by lower deposit balances that were partially offset by higher debit-card interchange fees.

Home lending was stable due to higher mortgage-banking income, which was offset by lower net interest income on lower loan balances.

Credit-card revenue rose 6% due to higher loan balances. Car-loan revenue was down 23% due to loan spread compression and lower loan balances. Personal-lending revenue was up 7% on higher net interest income and higher loan balances.

HSBC analyst Saul Martinez reiterated a hold rating and kept his $60 target price on Wells Fargo.

While the bank has positive numbers, it's still subject to an asset cap by the U.S. Federal Reserve as it works through regulatory problems, such as its fake-accounts scandal, he said.

"We are optimistic about continued cost optimization efforts and relative capital flexibility; however, we note this is offset by our continued expectation for near-term net interest income pressure and limited line of sight on the removal of the asset cap by the Fed," Martinez said.

Also read: Morgan Stanley stock falls as feds reportedly scrutinize its wealth unit

-Steve Gelsi -Ciara Linnane

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04-12-24 1252ET

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