This week, the “big banks†as they are often referred to, will release their results for the third quarter. After a rough first half of the year, the Financials are looking for a bit of a rebound this season. Faced with a slew of challenges as the year got underway, Financials saw year-over-year growth decline 8% in the first quarter for both earnings and revenues. The second quarter showed an improvement in the bottom-line which increased 3%, but sales pulled back 1%. Going into the third quarter, Estimize contributors are anticipating profit growth of 5% and sales growth of 4.3%. The six biggest banks (BAC, C, JPM, WFC, GS, MS) are expected to do much better, averaging a consensus estimate of a 13.6% increase on the bottom-line and 3.0% growth to the top-line.
First Up To the Plate: JPMorgan & Chase (JPM), Wells Fargo (WFC) & CitiGroup (C)
Three heavy-hitters, JPMorgan Chase, Wells Fargo and CitiGroup, will kick off the bank reports when they release results on Tuesday before the opening bell. With most of the large mortgage settlements that have plagued the banks for the last several quarters out of the way, the greatest headwinds for these three could continue to be lower trading volumes for fixed-income and equities as well weakness in mortgages. These concerns are particularly worrying for JPMorgan Chase and Citigroup, with lower mortgage originations and applications taking their toll last quarter. However, both companies have seen their estimates trend higher ahead of this week’s releases amid an improving home loan landscape. Currently, the Estimize community believes JPMorgan will report earnings per share (EPS) of $1.45 for the third quarter, $0.05 above the Wall Street consensus, representing a 2% increase year-over-year. Revenues are also anticipated to see a slight uptick from the year-ago quarter at $24.1B, a 1% increase. The EPS consensus from Estimize for Citigroup is $1.18 versus the Wall Street consensus of $1.12, implying a 16% increase, with revenues of $19.1B suggesting a nearly 7% increase. Wells Fargo, the country’s largest mortgage lender which is often seen as a bellwether for the housing market, funded a mere $47B worth of mortgages in the most recent quarter. No questioning this was a disappointing figure, but a marked improvement over the first quarter’s $36B, and a good sign that loan growth was heading in the right direction. Investors will look for that momentum to continue in the third quarter, with current EPS estimates of $1.02 showing a slight increase of 3% and revenues of $21B showing an increase of 2%. Â
