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In the past two days, we've gotten results from all the big national banks. JP Morgan, Wells Fargo, Bank of America, and City Group. And I got to tell you, the market just can't stand it. In just the last two sessions, JP Morgan stock is down more than 5%. Bank of America's off almost 6%. City shed over 4%.
still sell and Wells Fargo has just been hammered. So, what the heck is going wrong here? I got to tell you, it's not the numbers. Most certainly not. Do you know that the actual numbers were good? I think it's a combination of high expectations and some cautious commentary as well as the aforementioned president presidential assault on credit card debt.
When JP Morgan reported yesterday, they posted a solid top and bottom line beat excluding a $2.2 billion reserve that they took related to the Apple credit card and portfolio. they got from Goldman Sachs. These guys delivered a 7% increase in net interest income with 17% growth for their markets business.
That's fantastic. That's mostly sales and trading. Uh just stock trading was up 40% alone. These are amazing. But the investment banking business came in light down 5% year-over-year and 11% from the previous quarter. That weighed down by weaknesses in both debt and equity underwriting. And that was just plain bad.
Of course, even when the numbers are pristine, the reaction of JP Morgan's earnings hinges on the conference call commentary from CEO Jaime Diamond, who's become the almost Confuciouslike figure for the financial industry. And he often says things that really do freak out people. Something that happened again yesterday.
This time Jaime warned that I'm going to quote, "Eopolitical is an enormous amount of risk." End quote. And he also had some things to say about polluting budget deficits in the United States and around the world. Maybe that's why after opening flat, you know, was actually up $5 in pre-market trading.
The stock ultimately tumbled more than 4% yesterday before slipping another 1% today. I think JP Morgan stock will be fine. A lot of this was simply because the stock had rallied 35% over the previous 12 months before yesterday's report. In other words, it was due for a breather. What about today's reports from the other three bigs?
Okay, Wells Fargo, which we own for the Travel Trust, reported top and bottom line miss. While sales were up 4.5% year-over-year and earnings grew by 13%, they still came in light as did net interest income. It was disappointing. That said, a big chunk of that earning shortfall came from higher severance expense as well.
Wells Fargo, by the way, laid off a lot of people and cut costs. When you drill down, the business is doing pretty well, just not quite as well as Wall Street and I were hoping. Well, as far as efficiency ratio, a key measure of cost fell from 68% to 64%. Lower, by the way, is is better when it comes to that measure.
Um, because it cost it's cost divided by revenues. But the analyst spoiled by CEO Charlie Shar's relentless cost cutting. We're looking for 62.5%. Just not good enough. Now, imagine that told a story of a bank that's been unshackled after last year's removal of the Fed mandated asset cap of 2018. Wells Fargo is now able to grow more aggressively in areas like credit cards and investment banking.
And again, you've got to keep in mind that the stock was up like JP Morgan 35% over the preceding 12 months. That's one reason why we sold some Wells Fargo for the job yesterday even in the teeth of the hideous decline. More on that later. I still believe in Wells Fargo longer term, but the stock has finished go the stock has to finish going down and I don't think it is yet.
All right. How about Bank of America, which look fantastic. They posted a small top and bottom line B with a 7% revenue growth, 18% earnings per share growth. Astounding. Their net interest income was up 10% also slightly better than expected. Yet the stock still sold up 4% today. I think that's extreme.
Don't let that mislead you. Bank of America report a solid quarter. All four of the business lines, they beat revenue expectations with global wealth and investment management and global markets both up over 10% year-over-year. I'm not used to seeing that. Bank of Mark also sounded confident about 2026 guiding for 5 to 7% net interest income growth this year.
CEO Brian Monan said quote while any number of risks continue we are bullish on the US economy in 2026. End quote and thank you. It's tough to poke holes in this Bank of America quarter. Sure the company got a boost from lower thanex expected credit charges uh which helped drive their slightly better than expected earnings beat.
Like JP Morgan, their debt and equity underwriting was light. That was disappointing. But really take as a whole, I think this is really fine quarterback, maybe the best. And the stock only got hit today because Wall Street paints out with a broad brush. This decline was, I think, pure guilt by assoc association.
I'm pronouncing it innocent. Last but not least, there's Group, which delivered another good solid quarter. The latest in a long line of no drama results under CEO Jane Frasier. Excluding a one-time charge related to the bank sale of its Russian operations. City saw 8% revenue growth while earnings per share up 35%.
[cheering] City had the best in interest income of all the banks up 14% also ahead of expectations but as with Bank of America they benefit from a smaller than expected provision for credit losses which signals confidence in the economy but it's not an operational number below the top lines where it hurt was mixed bag city services business and its banking business uh both beat.
So did the markets business but that was driven by fixed income as equity trading fell a bit short. The company's personal banking in the United States had a shortfall and I was hoping that would start coming. I like that business needs to really climb as did the wealth unit though the wealth shortfall was very small.
Basically for city this was another professional quarter and for a turnaround story like this it would have normally been enough to send the stock roaring. Remember, cities much much much much is cheaper uh than its peers. Even after shooting up 66% last year, but today with the overall market down and Wall Street deciding these bank earnings were just yawners at best, another solid result from City wasn't enough to send the stock up.
We're all used to seeing it jump after earnings. One of the more interesting tidbits about City today didn't even come for the quarter. In an internal memo sent to employees, which is then picked up by basically every major financial news outlet, Frasier, CEO, said that her bank's transformation efforts are more than 80% complete.
Memo also included news about more layoffs and some interesting commentary about how city's adopting AI, but it matters that the bank's self-help efforts, which have moved the stock so much, are nearing completion. I got to wonder how long City Stock can keep running if the company's no longer being graded on a curve.
For now though, I think it's just too too cheap to ignore. It's probably the first one I would buy of the ones I just meant. Bit Bank of America, too. They're both they're both good. Now, here's the bottom line. The big national banks have all reported and though we've seen generally strong results, that wasn't enough to prevent Wall Street from turning against these stocks.
I'm not sweating this too much because the banks have had some major runs here. So, I think they were due for a pullback. After looking at the numbers, my verdict is that these stocks can keep working this year as long as the economy doesn't deteriorate from here. But they are taking a breather after coming in way too hot.
We get this credit card rate cap to the sidelines. The rally will start even maybe sooner than I expected. Oh, I expect some pain for the next at least week, maybe 10 days. Man, Money is back after the break. Coming up, could the stars of the dot era be rising again? Kramer's going off the charts to see if what's old is new again .
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