Bank Earnings: JPM, BAC, AX, GS & SCHW
- Jul 17, 2024
- 5 min read
Updated: Jul 10
July 18, 2024 | Premium Service | Bank earnings for Q2 2024 remind us a lot of Groundhog Day, the 1993 film directed by Harold Ramis and starring Bill Murray and Andie MacDowell. Each quarter, we have basically the same bank earnings, but each time the reaction from investors is different. And meanwhile, behind the scenes, institutional investors are churning positions in bank stocks, pushing down larger cap names from May highs and forcing smaller, less liquid stocks up. How will all this end?
A reader of The Institutional Risk Analyst asked why JPMorgan (JPM) had shown such a sharp increase in defaults on home equity lines of credit. In Q1 2024, JPM reported a huge jump in delinquency in the level of delinquency in home equity lines of credit. The chart below from BankRegData shows you the JPM results.
JPMorgan HELOC Loans | Q1 2024
Source: BankRegData
The rate of change in the JPM HELOC book was pretty ugly and illustrates one of our big concerns for financials, namely the tendency for credit metrics to display unusual levels of volatility. We asked JPM CFO Jeremy Barnum to clarify, but not expecting a response. The JPM HELOC book is now below 2% of total loans vs close to 10% a decade ago and thus is not part of the bank’s GAAP disclosure.
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