The biggest banks in the US are preparing to report a third quarter marked by shrinking margins and declining profits, according to a new report.
JPMorgan Chase and Wells Fargo release their Q3 earnings on Friday.
JPMorgan is expected to reveal a nearly 8% drop in earnings per share while Wells Fargo will likely report a nearly 14% drop in earnings per share, reports Reuters, citing data compiled by the London Stock Exchange Group (LSEG).
Next week, Bank of America is expected to report an approximately 14% drop in earnings per share, Citigroup is expected to report a 20% drop, and Goldman Sachs is expected to report a 35% drop.
The across the board decline is due to a combination of rising deposit costs, weak loan demand and shrinking net interest income (NII).
Although banks are feeling pressure from decreasing margins, they’re expected to generate strong revenues from other banking divisions, such as investment banking and trading.
Analysts at Oppenheimer say consumer loan delinquencies are down and notes banks have also shored up significant reserves to cover potential office loan losses.
Oppenheimer also expects the industry to post a 7% rise in investment banking revenues for all banks on average, and banks may report a decline in trading revenue amid a seasonal drop in volume.
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