Big Banks Q2 Earnings Expected to Show Rebounding IB, Soft Loan Growth

Seeking Alpha07-12

Big banks start releasing Q2 earnings on Friday. While interest rates remain high and Federal Reserve rate cuts still in the future, expect loan growth to remain weak, analysts say. Meanwhile, banks' ...

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While interest rates remain high and Federal Reserve rate cuts still in the future, expect loan growth to remain weak, analysts say. Meanwhile, banks' ...</p>\n\n<a href=\"https://seekingalpha.com/news/4123084-big-banks-q2-earnings-preview\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NTRS","symbol_name":"北方信托公司","start_time":0,"source_url":"https://seekingalpha.com/news/4123084-big-banks-q2-earnings-preview","article_id":"2450285391","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2450285391","pubTimestamp":1720769400,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Big banks start releasing Q2 earnings on Friday. While interest rates remain high and Federal Reserve rate cuts still in the future, expect loan growth to remain weak, analysts say. 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While interest rates remain high and Federal Reserve rate cuts still in the future, expect loan growth to remain weak, analysts say. Meanwhile, banks' investment banking (\"IB\") fees are likely to benefit as activity starts to rebound.\"Core trends will likely be characterized by modestly better spread revenues, soft loan growth, alongside improving fees and expenses,\" said Baird analyst David A. George in his Q2 bank preview.\"With PPNR multiples near ~5.5x and cap/assets metrics indicating more realistic returns (~1% ROAs), we aren't inclined to chase the group here but would be adding regional bank names rather than larger caps that have outperformed as of late,\" the analyst said.Graseck favors Overweight-rated Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM), and Wells Fargo (NYSE:WFC) heading into Q2 earnings season. Citi has the potential to bolster buybacks as its stress capital buffer declined by 20 basis points Y/Y. For JPM, she sees higher net interest income, higher IB fees, and lower share count.And Wells Fargo (WFC) may raise its NII guidance of down 7%-9% Y/Y, \"given that the guide has not been updated since it was provided in January when the forward curve baked in ~6 rate cuts in 2024 vs ~1 currently.\"Jefferies analyst Daniel Fannon sees an investment banking rebound benefiting Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS). He estimates that Q2 advisory revenue at Goldman rose 15% Y/Y to $742M and at Morgan Stanley climbed 17% Y/Y to $532M.Sales and trading revenue at Goldman is expected to rise 9% to $6.2B and at MS is seen improving 5% Y/Y to $4.8B, Fannon said.In U.S. banks' earnings, \"stable-to-rising EPS outlooks should drive a re-rating in stocks,\" wrote Bank of America analyst Ebrahim H. Poonawala in a note to clients. The bottoming of NII and still-healthy credit quality are key.Note: EPS figures are non-GAAP, if available.Here's what to look for:JPMorgan Chase (JPM): EPS consensus estimate is $4.51 compared with $4.63 in the previous quarter and $4.37 a year ago. Net interest income of $22.8B is expected, according to the Visible Alpha consensus, down from $23.1B in Q1 and up from $21.8B in Q2 2023.The bank's guidance for 2024 NII currently stands at ~$91B, excluding markets. The Visible Alpha consensus is $91.0B. Adjusted expense guidance is ~$92B. Bank card services net charge-off rate was projected to be less than 3.50% when JPM posted Q1 results.Citigroup's (C) Q2 EPS consensus of $1.39 indicates earnings will be roughly stable with $1.40 in Q1 and drop from $1.58 in Q2 2023.The bank's previous 2024 guidance expected revenue of $80B-$81B, NII ex-markets down modestly Y/Y, and expenses of $53.5B-$53.8B, excluding the FDIC special assessment.Wells Fargo (WFC) is expected to post Q2 EPS of $1.28 compared with $1.26 in the previous quarter and $1.25 a year ago.The bank's 2024 guidance expected NII to fall 7%-9% from 2023. Noninterest expense guidance is ~$52.6B.After passing the Federal Reserve's annual stress test, Wells Fargo (WFC) announced plans to boost its dividend by 14%. Chris Lau, Investing Group leader of DIY Value Investing, tells investors to watch for the size of its buyback program in its Q2 report, one of five things to consider ahead of earnings.Goldman Sachs (GS) EPS is seen slipping to $8.40 in Q2 from $11.58 in Q1 and rising from $3.08 in the year-ago period.It's a year of transition for Goldman as it retrenches from its loss-generating foray into consumer finance. SA Analyst Noah's Arc Capital Management expects strong growth in the firm's investment banking unit, especially in M&A advisory and capital markets. In the earnings call, the analyst will be looking for evidence of increasing deal flow.Bank of America (BAC) is expected to report Q2 EPS of $0.80, less than the $0.83 it earned in Q1 and the $0.88 in Q2 2023.SA Investing Group leader JR Research is keeping an eye on operating leverage and net charge-offs at BofA (BAC). The bank has affirmed its confidence in reaching \"mid-teens' return on tangible common equity. With its focus on digital capabilities Bank of America should be able to improve its operating leverage. With the company's exposure to commercial real estate, monitor its net charge-offs in Q2, JR Research advised.Morgan Stanley's (MS) EPS consensus of $1.65 indicates a drop from $2.02 in the prior quarter and an increase from $1.24 in the year-ago quarter.BofA's Poonawala expects an investment banking rebound, positive price action/flows, and resilient trading may fuel a positive EPS surprise/revision for Morgan Stanley (MS), as well as Goldman. MS should see particular strength in equities and stabilizing wealth NII, he added.Earnings calendar:Friday, July 12: Bank of New York Mellon (BK), Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC).Monday, July 15: BlackRock (BLK), Goldman Sachs (GS)Tuesday, July 16: Bank of America (BAC), Charles Schwab (SCHW), Hancock Whitney (HWC), Morgan Stanley (MS), PNC Financial Services (PNC), Pinnacle Financial (PNFP), State Street (STT)Wednesday, July 17: Citizens Financial Group (CFG), Discover Financial (DFS), First Horizon (FHN), Northern Trust (NTRS), Synchrony Financial (SYF), U.S. Bancorp (USB)Thursday, July 18: KeyCorp (KEY), M&T Bank (MTB)Friday, July 19: American Express (AXP), Comerica (CMA), Fifth Third Bancorp (FITB), Huntington Bancorp (HBAN), Regions Financial (RF)Monday, July 22: Truist Financial (TFC)","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":3,"commentSize":0,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2450285391"}