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From the Reuters collection, a composite file photo depicts Wells Fargo, Citibank, Morgan Stanley, JPMorgan Chase, Bank of America, and Goldman Sachs. REUTERS Reuters, July 8 – Most big U.S. banks are anticipated to record a remarkable turnaround in quarterly profits next week, despite trading income slumping and lending revenue stalling due to low interest rates and weak demand, as feared pandemic loan losses fail to materialize. According to analyst projections compiled by Refinitiv, the country’s three largest banks, Bank of America Corp (BAC.N), Citigroup Inc (C.N), and JPMorgan Chase & Co (JPM.N), will more than treble their second-quarter profits. After suffering its first loss since 2008, Wells Fargo & Co (WFC.N), the fourth-largest U.S. lender, is anticipated to return to profitability in the second quarter. As millions of Americans struggled financially due to pandemic lockdowns a year ago, the country’s four major banks reported $33 billion in potential loan losses. According to analyst estimates, the big four could record less than $1 billion in provisions for the second quarter as a result of extraordinary government stimulus and loan repayment holidays. As Americans return to business as usual, the big four could record less than $1 billion in provisions for the second quarter. According to analyst forecasts, Bank of America, Citigroup, JPMorgan, and Wells Fargo are anticipated to record $24 billion in second-quarter earnings, up from $6 billion last year. Piper Sandler analyst Jeff Harte stated, “Normalization is playing out.” “We’re on our way.” The first big banks to report this quarter will be Goldman Sachs Group Inc (GS.N) and JPMorgan Chase & Co. (JPM.N) on Tuesday, July 13. Analysts, on the other hand, will be looking at big banks’ pre-provision profits to see how they’re truly doing. In general, they foresee a slowdown in core operations because to low interest rates and a lack of loan growth, particularly on credit cards, which many Americans were able to pay off with the help of stimulus checks due to restricted spending during the lockdowns. Trading revenue, which jumped across Wall Street last year as a result of high volatility, is anticipated to decline this year. According to Oppenheimer analyst Chris Kotowski, pre-provision second-quarter earnings at JPMorgan will be down around 20% from the prior year’s period. A drop in lending-related interest revenue and trade will be the driving forces behind this. Last month, JPMorgan CEO Jamie Dimon stated that once markets become “more regular,” trading revenue might drop by as much as 40%. Nonetheless, thanks to a record-breaking takeover spree that has flooded them with advisory fees, JPMorgan and other Wall Street banks might be able to make up some of the gap. find out more According to UBS analyst Brennan Hawken, financial advice income at Goldman Sachs might increase by 65 percent from a year ago. “We’re set up for M&A to seize the spotlight,” Piper Sandler’s Harte said, adding that some banks will record robust fees from securities underwriting. According to analysts, Goldman would post a 50% increase in earnings due to the strength of its consulting and underwriting businesses, which are less vulnerable to swings in loss provisions. The deal fee windfall, on the other hand, may have a smaller impact on the bottom line this quarter for several Wall Street firms. According to RBC Capital Markets analysts, Morgan Stanley (MS.N) may not see the same increase in investment banking fees as its peers because fewer of its deals finished in the quarter. David Henry in New York contributed to this report.
Elizabeth Dilts Marshall contributed additional reporting from New York.
Michelle Price and Matthew Lewis edited the piece.
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