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Investing.com -- Five major U.S. banks reported second-quarter 2025 results on Tuesday, with all beating earnings per share estimates, according to RBC.
Bank of New York Mellon (NYSE:BK), Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM), State Street (NYSE:STT), and Wells Fargo (NYSE:WFC) all exceeded analyst expectations, prompting RBC to adjust EPS estimates upward for all five institutions.
The strong performance demonstrates the banking sector’s resilience following heightened economic uncertainty in the first half of the year. Credit quality remained healthy, with loan loss provisions and net charge-offs coming in better than expected.
Capital levels for all five banks were strong and comfortably above regulatory requirements, suggesting stock buybacks—which were robust in Q2—will remain prominent over the next 12 months. This is particularly likely given the lower indicative Stressed Capital Buffers for Citigroup, JPMorgan Chase, and Wells Fargo.
Net interest income increased by an average of 3.2% from the previous quarter across the five banks. The average second-quarter net interest margin was 1.97%, three basis points below the prior quarter.
RBC noted that net interest income reached a trough for most covered banks during Q2/Q3 of 2024 as funding costs declined faster than earning asset yields.
Core noninterest income was mixed but rose an average of 1.2% from the prior quarter and 6.6% year-over-year. This growth benefited from stronger investment banking revenues compared to the same period last year.
Trading revenues showed strength as market volatility drove equity trading for Citigroup, JPMorgan Chase, and Wells Fargo.
State Street and Bank of New York Mellon both saw strength in core noninterest income, up mid-single-digits sequentially with strong year-over-year growth driven by higher assets under custody and assets under management levels.
Operating expenses were mixed, decreasing an average of 0.7% sequentially while increasing 3.9% year-over-year.
Higher wages and technology spending continue to be the primary drivers of noninterest expense growth.
Credit quality indicators remained positive, with nonperforming asset levels staying healthy and credit costs manageable.
The banks experienced an average four basis point sequential decrease in their net charge-off ratio, while their nonperforming asset ratio increased 2.2% sequentially.
In Q2 2025, the average year-over-year increase for tangible book value and book value per share growth was 12% and 9.7%, respectively.
State Street led with a 17% increase in tangible book value per share and 12% increase in book value per share year-over-year.
RBC expects similar trends for banks reporting results on Wednesday, including strong trading results, healthy credit quality, modest net interest income growth, solid stock buybacks, and year-over-year growth in book value per share.
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