The biggest U.S. banks are about to show how much those uncertainties, and the slide in market volatility, affected third-quarter results and the lenders’ outlooks. JPMorgan Chase & Co. and Citigroup Inc. come first, on Thursday.
Here are some likely takeaways:
Trading Revenue
Trading probably dropped from the same period a year earlier. Executives from JPMorgan, Citigroup and Bank of America Corp. told investors last month to expect declines ranging from 15 percent to 20 percent. Goldman Sachs Group Inc., coming off its worst first half for the trading business in more than a decade, said the third quarter remained challenging. Subdued volatility, especially compared with the turmoil from Brexit and the U.S. election a year earlier -- made the period particularly tough.
Loan Growth
Lending probably decelerated for the fourth straight quarter, according to Royal Bank of Canada analysts and Bloomberg calculations. Commercial and industrial clients are “hesitant to borrow in the face of uncertainty,” Jason Goldberg, an analyst at Barclays Plc, said of Washington’s inaction after higher hopes earlier in the year. Total loans may have climbed just 1.8 percent, the smallest increase in more than two years.
Bitcoin Battles
The largest cryptocurrency has more than quadrupled this year, a surge that didn’t go unnoticed by executives at the largest U.S. banks. In September, JPMorgan Chief Executive Officer Jamie Dimon called bitcoin a “fraud” that “won’t end well,” while Goldman Sachs CEO Lloyd Blankfein tweeted Oct. 3 that Goldman is examining it.
Credit Trends
Analysts estimate that 17 of the 20 U.S. regional banks tracked by Bloomberg Intelligence may have built loan-loss reserves in the third quarter, up from seven in the second quarter and 12 in the first. According to KBW Inc., credit trends were particularly “noisy” in the third quarter, with cards and auto loans affected by hurricanes while underlying metrics indicate that credit is slowly normalizing.
Tax Cuts
Net income could rise 7 percent annually for the six largest U.S. banks if President Donald Trump and Republicans in Congress can enact their proposed corporate tax cut -- still an open question. The Republican framework calls for lowering the corporate tax rate to 20 percent from 35 percent. Banks stand to benefit from this more than other industries because they typically have fewer deductions.
Headcount
The biggest banks have stopped cutting jobs in recent quarters after headcount bottomed in the middle of last year. Did they start eliminating jobs again, or were there opportunities to add people? Will banks’ relentless push toward utilizing artificial intelligence and automating tasks result in fewer people?
Източник: Bloomberg Pro Terminal
Jr Trader Petar Milanov
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.