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Your Big Bank Q2 Earnings Cheat Sheet: Watch For Loan Activity

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Your Big Bank Q2 Earnings Cheat Sheet: Watch For Loan Activity
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Big banks, among the early reporters, are set to issue quarterly earnings reports Friday. At the outset, the climate looks brighter for the banks, as markets remain volatile — a prerequisite for better trading revenues and robust capital market activity.

The IPO market in the U.S. was strong in the second quarter, with 66 deals going through that raised $16 billion in capital, marking the most active Q2 since 2014, according to PricewaterhouseCoopers.

The sore point is the prospect of an inverted yield curve, as short-term yields rise in response to the Fed's hawkish predisposition, while the yield on long-term instruments is flatlining.

This is expected to pressure banks' net interest margins.

"Normally I look at trading activity as an indicator, but I'm going to be looking at their loan activity. That's a big indicator of economic growth, more so than yield curve, because it's the supply of loans," TD Ameritrade Senior Trading Specialist Shawn Cruz told Benzinga when asked about bank earnings outlook.

Cruz said he is focused on the ability of banks to advance loans and their perspective on the repayment capacity of companies.

"If they start to see contraction of their loans, reading between the tea leaves, I think that would tell you that banks don't want to lend money. So that will tell us a lot."

Here are the earnings schedules and Street expectations for big banks:

JPMorgan Chase & Co. (NYSE: JPM)

Earnings Date: Friday morning.

Consensus Estimates (EPS/revenue): $2.22/$27.35 billion vs. last year's $1.82/$25.76 billion.

Stock Performance (year-to-date): up 1.3 percent.

Update: JPMorgan Chase Q2 EPS $2.29 Beats $2.22 Estimate, Sales $27.8B Beat $27.36B Estimate

Citigroup Inc (NYSE: C)

Earnings Date: Friday morning.

Consensus Estimates (EPS/revenue): $1.56/$18.47 billion vs. last year's $1.28/$17.9 billion.

Stock Performance (year-to-date): down 7.5 percent.

Update: Citigroup Q2 EPS $1.63 Beats $1.57 Estimate, Sales $18.5B Beat $18.49B Estimate

Wells Fargo & Co (NYSE: WFC)

Earnings Date: Friday morning.

Consensus Estimates (EPS/revenue): $1.12/$21.68 billion vs. Last Year's $1.07/$22.17 billion.

Stock Performance (year-to-date): down 5.4 percent.

Update: Wells Fargo Q2 EPS $0.98 Misses $1.13 Estimate, Sales $21.6B Miss $21.7B Estimate

See Also: After Big Monday Rally, Markets Approach Recent Highs As Earnings Season Looms

Bank of America Corp (NYSE: BAC)

Earnings Date: Monday morning, July 16.

Consensus Estimates (EPS/revenue): 57 cents/$22.2 billion vs. last year's 46 cents/$23.07 billion.

Stock Performance (year-to-date): down 1.6 percent.

Update: Bank of America Q2 EPS $0.63 Beats $0.57 Estimate, Sales $22.6B Miss $22.65B Estimate

Goldman Sachs Group Inc (NYSE: GS)

Earnings Date: Tuesday morning, July 17.

Consensus Estimates (EPS/revenue): $4.65/$8.73 billion vs. last year's $3.95/$7.89 billion.

Stock Performance (year-to-date): down 10.4 percent.

Morgan Stanley (NYSE: MS)

Earnings Date:Wednesday morning, July 18.

Consensus Estimates (EPS/revenue): $1.12/$10.11 billion vs. Last Year's $1.23/$9.5 billion.

Stock Performance (year-to-date): down 7.5 percent.

Given the underperformance of big bank stocks, can earnings serve as an inflection point?

Big moves are unlikely, according to CNBC, which quoted Stacey Gilbert, Susquehanna's head of derivative strategy. The options markets are implying less than 2-percent moves for JP Morgan, Citi and Wells Fargo, the analyst said.

The Financial Select Sector SPDR Fund (NYSE: XLF) is down 1.8 percent year-to-date.

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