Bank earnings preview: What to expect for big banks
$JPMorgan Chase(JPM)$ , $Citigroup(C)$ , $BlackRock(BLK)$ , and $Wells Fargo(WFC)$ will kick off the financial sector’s reporting season on October 13, followed by $Bank of America(BAC)$ and $Goldman Sachs(GS)$ on October 17, and $Morgan Stanley(MS)$ on October 18.
Financials performance by sector: Insurance industry is the standout
The Financials sector is expected to see a 8.7% year-over-year earnings growth rate, ranking fourth among all sectors.
The Insurance industry is the standout performer with a 64% growth rate, significantly boosting the sector.
Excluding insurance, Financials' growth drops to 2.1%.
Sub-industries like Property & Casualty Insurance and Multi-line Insurance show strong growth, while Reinsurance is expected to recover.
In the Financial Services industry,
Multi-Sector Holdings (18%) and Transaction & Payment Processing Services (10%) are poised for double-digit earnings growth.
Banks show a 4% growth.
Diversified Banks are set for 7% growth, but Regional Banks might decline by -15%.
What to focus on big banks earnings
Expected strong growth in net interest income, potentially offsetting a drop in trading revenues and fees.
Forecasted EPS: 3.89, a 25% rise from the same quarter last year.
Trading above its 2023 opening price, indicating market confidence in its stability.
Focus on managing costs and expenses due to recent restructuring.
Forecasted EPS: 1.18, a 23% drop from the same quarter last year.
Stock trading below its 2023 opening price, showing room for potential gains with positive earnings surprises.
Operating expenses rose in the inflationary environment of 2023.
Forecasted EPS: 0.80, a 1% drop from the same quarter last year.
Trading below its 2023 opening price, making it attractive to investors anticipating a rebound.
Expected rise in revenues driven by its wealth management division.
Forecasted EPS: 5.34, a decrease of 36% from the same quarter last year.
Earnings known to be volatile, but a rebound expected from Q2.
Revenues expected to drop due to the impact of bond yields on its stock.
Forecasted EPS: 1.28, a 15% drop from the same period last year.
Financial sector faces multiple concerns
Key concerns for this earnings season include the impact of the Q3 increase in the 10-year Treasury yield on capital levels, stability of deposits, slowing loan growth, and rising loan loss provisions due to credit quality concerns.
Non-interest revenues face challenges, including weak mortgage volumes and stable credit card spending amid worsening credit.
Asset management revenues might decline due to market-driven reductions in assets under management. Stringent cost control measures are expected.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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