A bustling week of key economic events with two inflation reports will culminate in a flurry of earnings releases from top U.S. banks, offering crucial insights into the state of the economy and the health of U.S. consumers and firms.
On Friday, investors will scrutinize the first-quarter financial results from major financial institutions such as JPMorgan Chase & Co.
These earnings releases will pave the way for next week's reports from Goldman Sachs Group Inc.
What are the key expectations for first-quarter 2024 earnings reports from major U.S. banks?
Q1 2024 Bank Earnings: What Market Consensus Expects
According to the Benzinga Pro platform, the consensus among median Wall Street analysts are the following estimates for earnings-per-share (EPS) and revenues from U.S. banks reporting first-quarter 2024 results in the upcoming days.
BankQ1 2024 EPS Est.Q1 2023 EPSQ1 2024 Revenue Est.Q1 2023 Revenue
- JPMorgan Chase & Co.4.154.32$41.836B$38.35B
- Wells Fargo & Co1.091.07$20.203B$20.73B
- BlackRock Inc.9.327.93$4.676B$4.24B
- Citigroup Inc.1.201.86$20.393B$21.45B
- State Street Corp.1.501.52$3.061B$3.10B
- Goldman Sachs Inc.8.569.87$12.917B$25.38B
- Charles Schwab Corp0.730.93$4.718B$6.36B
- Bank of America Corp0.770.94$25.464B$26.26B
- Morgan Stanley1.661.70$14.412B$23.04B
According to Ebrahim H. Poonawala, a bank equity analyst at Bank of America, major U.S. banks were "well positioned to navigate an uncertain macro backdrop" characterized by higher-for-longer interest rates.
The analyst emphasized banks with a focus on Main Street have outperformed those more closely linked to Wall Street.
As an example, he showed that money center banks, such as Citigroup, have risen more with respect to Wall Street peers, such as Morgan Stanley, "as markets bake-in the more certain upside from higher for longer interest rates for the money centers" versus a "still nascent rebound in capital markets activity."
Citigroup still offers a compelling risk/reward, according to Poonawala, who reiterated the Buy rating and raised the price target from $65 to $75.
According to the expert, fewer rate cuts should also drive positive EPS revisions in JPMorgan Chase & Co., a stock investors are engaged in a valid discussion about whether management's ambitious 17%+ Return on Tangible Common Equity (ROTCE) target could potentially be reset higher, at least for the foreseeable future.
"Relative to the beginning of the year, the outlook for the large cap banks appears clearer, which leads us to be cautiously optimistic on the group," said Richard Ramsden, analyst at Goldman Sachs.
Catalysts providing an optimistic outlook for banks include the prospect of improved Net Interest Income (NII) in the short term due to fewer anticipated rate cuts in 2024, the possibility of increased excess capital if significant changes occur to the Basel 3 Endgame (B3E), reduced apprehension regarding the evolution of credit reserves, and a rebound in investment banking activities.
Ramsden maintains a positive outlook on JPMorgan Chase & Co. and Wells Fargo & Co., both of which are Buy-rated by Goldman Sachs. "There is potential for both to exceed expectations in terms of fee revenue, leveraging the ongoing secular recovery and capturing market share in capital markets," he stated.
