On Friday, Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo & Company (NYSE:WFC).
Analysts expect US banks to show further negative earnings growth before returning to profit growth this quarter.
“Analysts are keeping quiet about U.S. banks, which are expected to see profits fall another quarter from a year ago,” said Peter Garnley, Saxo Bank’s head of equity strategy.
“The interest rate shock negatively impacted bank earnings and activity levels across the investment banking sector. With the average maturity of credit portfolios around seven years, banks slowly began rolling assets to higher interest rate levels, That’s going to start accelerating the net worth. Earnings numbers will improve profitability over time.”
Gurnley said US banks “should be viewed as excellent tactical deals in the years to come” if the US economy were to experience only a shallow recession in substance.
Focusing on the broader earnings season in the fourth quarter, his team sees headwinds to earnings as “more industries are experiencing margin compression than they are experiencing margin expansion.” said it expected to continue.
Q2 and Q3 earnings disappoint last spring as analysts “have not seen margin compression and, judging by current estimates, have not significantly lowered expectations” I did, Garnery said. There may be more disappointments ahead. “
