The six largest U.S. banks are anticipated to report robust third-quarter earnings next week, primarily driven by a resurgence in investment banking activity. JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and Wells Fargo are all expected to benefit from increased dealmaking. A resilient economy is also supporting consumer and commercial lending divisions, further bolstering their financial performance.
Analysts and investors will be closely watching the banks’ commentary on the economic outlook, investment banking, and trading when the major lenders begin announcing results on Tuesday. Focus will be on any shifts in the credit environment, the impact of jobs data, and broader economic trends. While consumer confidence has been somewhat subdued, business confidence continues to evolve, prompting careful monitoring of any lingering concerns from earlier market volatility.
Investment banking has rebounded after a slowdown earlier in the year, spurred by easing regulations and expectations for further rate cuts. This has unlocked mergers and acquisitions, with JPMorgan noting a particularly busy summer for dealmaking. M&A and initial public offerings have been key drivers of this surge. Investors are also focusing on net interest income forecasts, as the U.S. economy remains resilient.
Individual performance expectations vary among the banks. JPMorgan Chase anticipates strong investment banking revenue growth. Bank of America expects a notable increase in investment banking fees. Citigroup projects a surge in EPS fuelled by capital markets. Morgan Stanley is also likely to see substantial growth in EPS, driven by gains in both investment banking and trading. Investors will be looking for any warning signs in the consumer businesses, and “there are also some growing concerns around potential defaults in some smaller firms.”
