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Banks Or Bust: The Tone For Q3 Earnings Season Will Be Set This Week By Financial Institutions

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Quarterly reports for the major banks are set to start releasing results this week, and there are some positives to take away for the upcoming earnings season.

JPMorgan & Chase Co

Financials - Diversified Financial Services | Reports October 12, BMO

Despite the stagnancy last year, things are starting to look upwards for J.P. Morgan. This quarter, Estimize predicts EPS to be $1.71 and the Street predicts EPS at $1.67, with an overall projected year-on-year growth rate at 8%. The bank also tends to outperform the EPS predictions, beating Estimize and Wall Street 67% and 77% of the time, respectively.

And one can understand why. Last week, the FDIC released a report showing how J.P. Morgan has led American banks in total deposits for the first time in 23 years, edging out Bank of America Merrill Lynch. This news comes as a huge win for J. P. Morgan, expectedly so after seeing significant deposit growth over the past 5 years. In the last quarter, the bank has also made strides to expanding their network through horizontal integration, a notable example being their investment into Bill.com. The move has made ripples through the B2B payments market, which up until now, has been crawling towards digitalization.

However, FICC Trading Revenue seems to have taken a particular hit, and this is a reality that does not only ring true for JPM. Trading revenues have been low for all banks across this quarter, with Estimize predicting a YoY growth for JPM trading revenues to fall by around 20%.

Citigroup

Financials - Diversified Financial Services | Reports October 12, BMO

Joining the likes of J.P. Morgan and Bank of America, Citigroup too seems to be looking at a decent YoY growth rate for EPS, with Estimize predictions at approximately 7%. The bank is  expecting EPS values of $1.33 and $1.32 according to Estimize and the Street respectively.

Whilst Investment Banking and Equities Trading revenues may be projected to grow this quarter, Citigroup - like its competitors - seems to have taken a knock in FICC Trading revenues. At an investor conference mid-September, CEO John Gerspach said he was expecting around a 15% fall in total trading revenues.  

Gerspach also argued that there is possibly a negative outlook on financial earnings within the past few months. At Barclay's financial conference in New York, he said that volatility "has remained somewhat subdued throughout this quarter, especially when you compare it to the third quarter of last year where we had a lot of activity in the markets in the third quarter of last year, both on the heels of Brexit and then in advance of the U.S. elections."

 The question, of course, for all banks moving forward is tax reform. President Trump's administration seems keen on devising a plan to lower corporate taxes, but there is no assurance as to whether it will pass or make it amongst this year's reforms. An interest rate hike is also in the cards for the end of this year, and this could potentially help to boost bank profits.

Wells Fargo

Financials - Commercial Banks | Reports October 13, BMO

After their recent scandals and facing the heat on Capitol Hill from Senator E. Warren, Wells Fargo is likely to fly under the radar by way of contrast to the other big banks, who are likely to post positive quarterly earnings.

Still perhaps, there is a positive outlook for WFC, who will attempt to get back on track in the new earnings season. Estimize predicts that their YoY growth for EPS is around 2%, with revenue remaining the same. Estimize and Wall Street both predict EPS to come out at $1.04 this quarter.

Bank of America

Financials - Diversified Financial Services | Reports October 13, BMO

Recently, Bank of America has been making larger strides into digital banking, shutting down more physical branches across the country. The move seems to be working, with Estimize predictions for their projected year-on-year growth this year aggregating to a whopping 17%.

Bank of America's stock price has been gradually rising since early September, and Estimize predicts their EPS at around $0.48 in comparison to $0.46  predicted by Wall Street. By way of reference, the bank tends to beat Wall Street estimates 75% of the time, and surpasses the Estimize consensus  57% of the time.


Get your estimates in here before these banks report!

 

(Photo Credit: Kristen Cavanaugh)

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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