JPMorgan Chase and Goldman Sachs reported fourth quarter results on Wednesday and handily beat analysts' estimates. However, comments from management and the share performance tell a different story: Banks are still struggling with revenue growth.
JPMorgan reported earnings per share of $1.39 versus analysts' estimates of $1.16. Revenue came in at $24 billion, right where analysts said it would. (Read More: JPMorgan Profit Up; 'Whale' Swallows Dimon Pay.)
But the shares were up less than half a percent by 2 p.m. ET Wednesday afternoon, and closed up 1 percent. That's because JPMorgan's net interest margin (NIM) —the difference between how much the bank pays to borrow, including for deposits, and the rate it lends at— is feeling the squeeze. It fell .07 percent this quarter and judging by comments from management, will continue to fall.
"We expect modest pressure on NIM for the next several quarters," said JPMorgan's new CFO Marieanne Lake on a call to analysts.
So far, the bank isn't making it up on volume, with muted loan growth of 2 percent. Recognizing the difficulty of finding worthwhile investments in this low interest rate environment, CEO Jamie Dimon said, "We'd prefer investing in loans to investing in securities. We're investing in securities because we can't generate loans."
The corporate and investment bank, which is one business that could offset this margin squeeze, showed big gains over last year with revenue up 21 percent from the same quarter a year ago.
But the trend from quarter to quarter doesn't look so good. It has fallen steadily for the last four quarters. Fixed income and equity trading fell 15 percent from last quarter, and equity trading was down 14 percent.
The bright spot was the advisory business, whose revenues rose 20 percent from the third quarter. JPMorgan management acknowledged that growth is coming in part from taking market share.
Dimon's comments on the company's capital plans didn't do much to raise investors' spirits. He said the bank had requested a dividend raise, and a smaller capital buyback program. The purpose of cutting back on buybacks was to satisfy Basel III Capital requirements by the end of 2013.
The big news at JPMorgan Chase doesn't really do that much for earnings prospects: It reported on what led to the losses from the infamous "London Whale." The gist: Dimon got compensation of $11.5 million for the year—a 50 percent pay cut. (Read More: How JPMorgan 'Whale' Traders Sought to Avoid Losses.)
Former chief risk officer Barry Zubrow, former CFO Doug Braunstein and former head of the CIO Ina Drew were all blamed liberally for their failure to control the Whale. The bank has "fixed some things" across the institution that needed fixing and the Whale chapter is now mostly behind them, according to Dimon.
"We've used it to get stronger, better, smarter and tougher," Dimon said of the review in the aftermath of the Whale's losses.
Goldman Sachs fared better in terms of share price, closing up more than 4 percent. Granted it had the bigger beat— with $5.60 a share of fourth quarter earnings versus the $3.78 analysts were expecting. Goldman's net revenue of $9.2 billion was well ahead of the $7.9 billion analysts anticipated for the quarter. (Read More: Goldman Profit Jumps on Banking, M&A.)
Look under the hood, and there are still some issues with these results.
Fixed income trading, as always a big driver of revenues, jumped 50 percent from a year ago, but fell 8 percent from the third quarter. Equities trading was the surprise with revenue up 45 percent from a year ago and 18 percent from last quarter. But the sale of Goldman's hedge fund administration business gave those results a $500 million boost.
Investment banking results needed the least explaining. Underwriting gave the biggest boost to the investment banking business, up 132 percent from a year ago and 37 percent from the third quarter. Advisory revenue rose 8 percent from a year ago, and maintained its level from the previous quarter. (Read More: Goldman Sachs Backs Down on UK Bonus Plan.)
Despite these results, CFO Harvey Schwartz took on the gloomy mantle of his predecessor David Viniar when he said, "Client activity continues to be constrained by economic and political uncertainty in developed economies." Schwartz acknowledged a year end uptick in client activity, but he still said clients were being cautious and conservative.
Schwartz wouldn't even celebrate the fourth quarter return on equity of 16.5 percent, a welcome relief after the previous two quarters of single digit returns. The firm's 2012 ROE resulted mostly from expense management, according to Schwartz. Small wonder he would not be pinned down on a future ROE target.
So all in all, the outlook for the biggest banks doesn't seem to be much brighter yet. Despite Jamie Dimon's statement that "we expect growth in 2013," the environment is still pretty difficult.
—By CNBC's Margaret Popper; Follow her on Twitter @popperm