CE 100 Stock Index Inches Up 0.6% as Bank Earnings Roll In 

Earnings season is here. And as is always the case, big banks kicked things off.

The CE 100 Index gained a scant 0.63% through last week, as quarterly reports from JPMorgan Chase and Citigroup, part of our pantheon of connected economy stocks, helped drive the Banking group higher by 5.4%. 

JPMorgan, as spotlighted here, gave evidence that consumers are continuing to spend as debit and credit sales volumes were up 10% year over year to $387.3 billion (credit card sales volume was $266.2 billion, vs. $236 billion a year ago).   

But the bank also boosted its reserves for anticipated loan losses by $1.1 billion. The charge-off rate in the card services business was 2.1%, up from 1.4% last year. 

The credit outlook is being driven by a macro outlook that management said on the call assumed, among other things, that peak unemployment would be 5.8%.  

In a statement that accompanied earnings, CEO Jamie Dimon noted that while the economy is on “healthy footings” and consumers have strong balance sheets, “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.”  

CFO Jeremy Barnum said that credit costs in the quarter were $1.4 billion, reflecting a reserve build of $300 million in cards and $50 million in home lending. Delinquency levels continue to normalize across portfolios, according to commentary on the call.

JPMorgan shares gained 8.8% through the week.

Citigroup’s stock gained 8.1%. The bank’s earnings report Friday showed that spending volume on its branded cards was up 9% to $115 billion. Loans past due between 30-90 days stood at 0.8% of branded cards, up from 0.5% last year. Citigroup’s earnings materials detailed that the total allowance for credit losses on loans was approximately $17.2 billion at quarter end, with a reserve-to-funded loans ratio of 2.65%, compared to $15.4 billion, or 2.35% of funded loans, at the end of the prior-year period.

Also within the bank segment, as tracked by PYMNTS, LendingClub shares popped by 6.4%. The company’s shares gained in the wake of an initiation by JPMorgan with an “overweight” recommendation. As reported by Yahoo Finance, the JPMorgan research stated that the digital marketplace/bank model has benefits through a stable revenue stream and low-cost funding — and notes that LendingClub’s is trading at a discount to tangible book value.

The bank segment’s gains we offset by losses in the “work” segment, which slipped 1.5%. WeWork shares were 23.1% lower. Bloomberg reported this past week that WeWork and Rhone Group defaulted on a $240 million loan tied to a San Francisco office building. That property is home to WeWork coworking space as an anchor tenant. 

Shares of Peloton slumped 16% in the week, leading the “Be Well” segment 2% lower. In another headline tied to sell-side research, Bloomberg noted that  Morgan Stanley said in a research note that Peloton’s web traffic has been decelerating and may prove a headwind to growth rates even as the company looks poised to add more subscribers in the months ahead.