Banks reporting fourth-quarter earnings on Wednesday will take center stage, with investors watching closely for insights on the health of the U.S. economy.

Traditionally seen as a barometer for broader economic performance, strong results from banks could set a positive tone for other sectors and the outlook for 2025.

Meanwhile, retail investors seem to have flocked to financial stocks ahead of earnings, anticipating strong results and positive commentary on the regulatory landscape going forward.

What To Expect From Banks Q4 Results: Earnings And Revenue Projections

According to data from Benzinga Pro:

Goldman Sachs Group Inc. (NYSE:GS) is projected to report an estimated earnings per share of $8.17, a significant 49% increase from the $5.48 it posted in the same quarter of 2023. Revenue is forecast at $12.25 billion, reflecting an 8% gain from $11.32 billion a year earlier.
JPMorgan Chase & Co. (NYSE:JPM) is forecast to post EPS of $4.11, a 35% increase from $3.04 in the fourth quarter of 2023. Revenue is projected to grow 8% year-over-year to $41.71 billion, up from $38.57 billion.
Citigroup Inc. (NYSE:C) is anticipated to show a sharp turnaround with an expected EPS of $1.22 compared to a loss of $1.16 in the fourth quarter of 2023. Revenue is estimated to rise 12% to $19.48 billion, up from $17.44 billion.
Wells Fargo & Co. (NYSE:WFC) is likely to report EPS of $1.35, up 57% from 86 cents in the same quarter last year. Revenue is expected to remain largely flat, edging up 0.5% to $20.59 billion compared to $20.48 billion.
Bank of New York Mellon Corp. (NYSE:BK) is projected to deliver EPS of $1.56, a substantial improvement from 33 cents a year earlier, with revenue increasing 8% to $4.65 billion, a slight rise from $4.31 billion.
BlackRock Inc. (NYSE:BLK) is expected to report EPS of $11.22, an increase of 16% from $9.66 in the fourth quarter of 2023. Revenue is estimated to grow 19% to $5.52 billion, up from $4.63 billion.

Retail Investors Bet Big On Financials

Retail investors appear optimistic about bank earnings, as financial stocks saw the largest weekly inflows since March 2023.

Bank of America's private client data revealed that $297 million flowed into financial stocks last week, reversing the $102 million outflows from the final week of December 2024. This bullish sentiment could fuel additional momentum if earnings exceed expectations.

The Financials Select Sector SPDR Fund (NYSE:XLF) closed last year with gains of 28%, outperforming the broader S&P 500 — tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) — by 5 percentage points.

Regulatory Tailwinds On The Horizon?

Banks could be positioned to benefit from a shifting regulatory landscape as Donald Trump's new administration assumes office.

The recent announcement of Fed Vice Chair for Supervision Michael Barr's early departure could mark the beginning of a more favorable era for the financial sector, according to veteran Wall Street investor Ed Yardeni.

Yardeni, president of Yardeni Research, highlighted that financials could be entering a “sustained period of more favorable regulatory change” after more than a decade of heightened oversight following the 2008 financial crisis.

Barr, a staunch proponent of tighter regulations, had advocated for the “Basel III endgame,” which would have imposed stricter capital requirements on banks.

With his exit, the analyst now expects a scaled-back version of these proposals, potentially easing compliance burdens for banks.

Yardeni sees Fed Gov. Michelle Bowman and Gov. Christopher Waller, both considered more bank-friendly, as frontrunners to replace Barr.

Additionally, Trump's administration may push for regulatory rollbacks across agencies such as the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, creating further upside potential for the sector.

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