US financial results season has arrived 24Q2 major US bank earnings forecast list!

moomooニュース米国株 wrote a column · Jul 10 16:37

On 7/12, when the financial results season begins, major US banks $JPMorgan (JPM.US)$、 $Wells Fargo & Co (WFC.US)$、 $Citigroup (C.US)$Financial results are scheduled to be announced, and investors will keep a close eye on their whereabouts in order to measure the soundness of the US economy.

According to FactSet, the second quarter of 2024The estimated profit growth rate of the S&P 500 (compared to the same period last year) is 8.8%. This is the highest growth rate since the first quarter of 2022. Meanwhile,The estimated growth rate of the financial sector is 4.3%It is expected that it will stay at that. Due to an increase in defaults (default), earnings growth is expected to slow down in most major US financial institutions this fiscal year. Investors are paying attention to trends in consumer and corporate loan demand amid prolonged high interest rates and deep-seated inflationary pressure. Analysts say the earnings of the financial sector40% in the fourth quarteran increase in,Healthy growth in the first half of 2025It is anticipated that it will be achieved.

Overall, major silver stocks have maintained strong performance since the beginning of this year.Citigroup has recorded an increase of 28% or more since the beginning of the year; JPMorgan Chase, Bank of America, Goldman Sachs, and Morgan Stanley have risen by about 22%, and Bank of New York Mellon has risen 16%. Furthermore, stock prices of major banks such as Citigroup and Bank of America recently hit record highs.

Specifically,With JPMorgan Chase, the largest bank in the US $Goldman Sachs (GS.US)$Profit forecasts are high, and increases of 8.14% and 14.6%, respectively, are expected compared to the same period last year.In terms of earnings per share (EPS), Goldman Sachs earnings per share were 8.54 dollars, a significant increase of 177.27% compared to the same period last year, $Morgan Stanley (MS.US)$Earnings per share are 1.66 dollars, which is expected to increase 34.11% from the same period last year.

US financial results season has arrived 24Q2 major US bank earnings forecast list!

What are the highlights of the Bank of America financial results season for the second quarter of 2024?
Signs of recovery in investment banking
According to data compiled by Bloomberg, analysts are JPMorgan Chase, Goldman Sachs, Morgan Stanley, $Bank of America (BAC.US)$, Citigroup'sInvestment banking business incomeIs in the 2nd quarterAverage increase of 30% or more (compared to the same period last year)I anticipate that.

However, bank officials do not expect investment banking operations to return to 2021 levels. M&A and IPOs surged due to low interest rates on the novel coronavirus and the government's economic stimulus measures, and investment bank revenue in 2023 fell from a historical high in 2021 to a low level for the first time in several years.

Deposits and loans
Deposits are showing moderate growth. According to Federal Reserve (Fed) data, deposit balances of small and medium-sized banks in the 2nd quarter of '24 remained flat as a whole, and shrank in large banks. Small and medium banks were mainly due to the growth of time deposits, and an increase of 11.1% per annum offset the 1.5% annual decline in other deposits. Meanwhile, in large banks, time deposits increased by 12.7%, but this was offset by a 9.4% decrease in the annual rate of other deposits. Lending growth remains weak.

Is net interest income likely to bottom out?
Net interest incomewithLoan Quality (Loan Quality)There is a high possibility that it will become a focus of attention in the market. Analysts at Barclays pointed out that net interest rate income declined for 6 consecutive quarters due to sluggish growth in loans and a moderate rise in fund costs, but it bottomed out in the 2nd quarter of '24. As for the future, capital costs have reached the peak of the current cycle, capital costs can be reduced after the Fed cuts interest rates, and loan growth tends to accelerate after interest rate cuts.

What is the next development of bank stocks in the interest rate cut cycle?
While multiple headwinds are blowing,Bank stock valuations are at historically low levels. The current P/E (price-earnings ratio) of major banks is approximately 55% of the S&P 500 index (historical average is about 61%). According to market consensus, it is expected that as the Fed begins its interest rate cut cycle, business confidence in bank stocks will improve, and loan amounts and loan quality will improve.

The US Federal Reserve (Fed)Annual Bank Stress Test Resultswill be announced on 6/26.All 31 major banks have passed this year's stress tests. This year's “worst” scenario included the US unemployment rate reaching 10%, stock prices falling 55%, and commercial real estate prices falling 40%. It is said to show the resilience and robustness of the Bank of America in the face of potential economic risks.

Last month, JPMorgan predicted that investment banks' fee income would increase by up to 30% from the same period last year from April to June (2nd quarter). This figure further exceeds the forecast shown on Investor Day last month.

Morgan Stanley analyst Betsy Graseck recommends Citigroup, JPMorgan Chase, and Wells Fargo as top choices for major banks. Mr. Graseck predicts that JPMorgan Chase will accelerate share buybacks over the next few quarters, and indicates that there is a possibility that Wells Fargo's net interest rate income forecast will also rise. Meanwhile, it was pointed out that Citigroup's views on share buybacks and earnings will be the focus.

Source: Seeking Alpha, Financial Times, Bloomberg
This article uses automatic translation for some parts
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