Bank Stocks Surge on Earnings and Lead CE 100 Up 2.9%

Earnings season is officially here, led, as ever, by big banks – and this time around, a 9% surge in the “Bank” pillar pulled the CE 100 Index 2.9% higher in a strong weekly showing.

Generally speaking, management was sanguine about the state of the consumer and about credit metrics — as their spending across debit and credit cards continued into the final few months of the year.

Resilient Economy and Consumer Spending

J.P. Morgan’s stock got an 8.1% boost.

As PYMNTS reported, CEO Jamie Dimon was upbeat about the economy itself. “The U.S. economy has been resilient,” he said in a release that accompanied earnings. “Unemployment remains relatively low, and consumer spending stayed healthy, including during the holiday season.”

The company’s earnings supplementals revealed that within the consumer/community banking segment, credit and debit card sales volume was up 8% year on year to $477.6 billion. Drilling down a bit, the card services sales volume surged to $335.1 billion, compared to $307.2 billion last year. The card services net charge-off rate was 3.3%, compared to 2.8% in the fourth quarter of last year. Deposits in the latest quarter within the segment were just over $1 trillion, down 4% year on year.

Looking ahead in the current year, management said on the call with analysts that the company expects to see growth in revolving loans tied to cards and “modestly higher” deposit balances. The net charge-off rate on the cards business is expected to come in at about 3.6%, per company materials. Chief Financial Officer Jeremy Barnum said during the earnings call that, through the past year, J.P. Morgan added about 10 million new card accounts.

Card loan growth will be “healthy” but below the “12% pace we saw in 2024, as tailwinds from revolving ‘normalization’ are largely behind us,” Barnum said.

Citi Points to ‘Good Momentum’

Citigroup’s stock was 12.1% ahead for the week.

As detailed last week, Citigroup’s fourth-quarter earnings results detailed that branded credit card spending volumes were up 5% to $135 billion. The average loan in the segment was $113 billion, adding 6% year on year. Installment loans in Q4 came to $7 billion, adding 12% from the year-ago period.

Citi CEO Jane Fraser said on a conference call with analysts that there has been “good momentum across all our businesses. From the global macro perspective, economies have done a good job, tolerating hikes from central banks, and inflation has clearly been receding.”

In the United States, she said, “growth is not only being driven by the higher-end consumer but also by a strong and innovative corporate sector.”

Chief Financial Officer Mark Mason said on the conference call that consumer “payment rates continue to normalize, and we continue to see spending growth.”

Ocado’s 16% rally took the Shopping pillar of the CE 100 Index ahead by 4.6%.  In the fourth quarter, the company logged 17.5% revenue growth and indicated that weekly orders were up 17% year on year.  Earnings materials revealed that active customers surged 12% over the same timeframe and average order values grew by 0.2%.

iRobot shares sank 15.2%, followed by Snapchat parent Snap, which lost 13%. The latter’s slide wound up dragging the Communicate pillar 4.9% lower.

The Federal Trade Commission (FTC) said last week that it referred a complaint against Snapchat operator Snap to the Department of Justice.

“The complaint pertains to the company’s deployment of an artificial intelligence [AI] powered chatbot, My AI, in its Snapchat application and the allegedly resulting risks and harms to young users of the application,” the FTC said in a statement.  Reached by PYMNTS last week, a Snap spokesperson said in an emailed statement that it has worked to make My AI beneficial for its community while also being transparent about the product’s capabilities and limitations.

Snap added that the FTC’s complaint would stifle innovation and competition.

“We look forward to working with the new Administration on AI policy that bolsters U.S. innovation while protecting our community,” the statement said.

In the Pay and be Paid segment of the CE 100 Index, which was up 3.7%, Mastercard’s shares gathered 4%. The payments network said it is collaborating with FreedomPay. The companies said that the joint efforts are designed to give businesses a “simplified and extended global payment gateway solution,” while also streamlining their ability to connect with acquirers and accept a broader array of payment methods.  The partnership will use FreedomPay’s presence in North America, Europe and Latin America and Mastercard’s global network to offer businesses worldwide more options for connecting to payment systems and processing transactions.