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Jim Cramer recaps earnings reports from 4 major banks

On Friday, CNBC’s Jim Cramer shared his thoughts with investors on the major banks that reported earnings this week.

“If the broader market hadn’t already roared yesterday, I think we could have had a nice rally in response to those numbers. But, as it stands, I’d say it’s a start of surprisingly strong earnings season,” he said. said.

JPMorgan Chase, Morgan Stanley, Wells Fargo and Citigroup published their latest quarterly results on Friday. Here’s Cramer’s take on each of the banks’ recent quarters:

JPMorgan Chase

JPMorgan Chase beat Wall Street expectations for revenue and earnings, helped by interest rate hikes from the Federal Reserve. Cramer said he was surprised the bank had had a strong quarter since CEO Jamie Dimon warned that the U.S. economy was likely to slip into a recession in the middle of next year.

However, Cramer said he still expects the bank to profit from higher rates.

“Banks make a fortune when the Federal Reserve raises interest rates, because they can take your deposits, for which they pay next to nothing, and then invest them in short-term Treasury bills to get a much higher risk-free return. high,” he said. Explain.

Wells Fargo

The bank beaten on profit and revenue in its last quarter, but saw its bottom line decline following its decision to increase its loan loss reserves.

Cramer said he liked the stock because the company has more interest rate exposure than most of its peers, making it attractive in a high interest rate environment. And while a risk of higher rates is that people could lose their jobs and have to default, leading to a higher percentage of bad debts, Wells Fargo’s strength in its net interest income is more than enough to offset the damage caused by bad debts, according to Cramer.

“I remain a believer here – management is executing incredibly well – I think the story only gets better as rates go up,” he said. “Buy Wells Fargo.”

Morgan Stanley

Cramer said he thinks the market overreacted to Morgan Stanley’s decision third quarter earnings and revenue are missing. The bank’s shares fell 5%.

While acknowledging the quarter was tough, Cramer said he thought the stock was a buy, pointing to the company’s generous dividend and stock buyback.

“I think Morgan Stanley can eventually thrive once the markets are balanced, but until then you have to be patient in this one,” he said.

Citigroup

Cramer said he would rather own the other banks than Citi, which beat revenue and earnings in its most recent quarter, but saw a 25% decline in earnings. Shares of the company rose 0.65%.

“We saw Citi rebound in response to earnings on several occasions. …And then you know what happened? The gains quickly faded and the stock went back down,” he said.

Disclaimer: Cramer’s Charitable Trust owns shares of Morgan Stanley and Wells Fargo.

Jim Cramer Recaps Earnings Reports From 4 Big Banks

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