Big banks begin earnings season this week as analysts’ estimates are down 16% in the past six months. Analysts have been concerned about loan volumes and a sluggish environment for deal making that is weighing on revenue. Comments from bank CEOs could ease some of the pessimism.
• The SPDR S&P Bank exchange-traded fund is down 19% for the year so far, compared with the 14% gain in the S&P 500 and a 31% gain in the tech-heavy Nasdaq. Bank stocks have been beaten down after three large bank failures in the spring.
• JPMorgan Chase is expected to report earnings per share of $3.96 on revenue of $39 billion. Revenue from its consumer division is expected to rise nearly 50% from last year’s second quarter, which could help to offset weakness in investment banking activity.
• Citigroup is expected to report earnings per share of $1.37 on revenue of $19 billion, and it is also expected to report a drop in investment banking revenue from the first quarter as the deal slump continued, according to FactSet.
• Wells Fargo is expected to report earnings per share of $1.18 on revenue of $20 billion. The San Francisco lender announced plans to raise its dividend by 17% starting in the third quarter, to 35 cents a share.
What’s Next: The financial sector is expected to report revenue growth of nearly 8% for the second quarter from last year, the highest growth rate of all 11 S&P sectors, according to FactSet Earnings Insight. Banks are expected to report revenue growth of 14%.
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