As U.S. bank profits drop, focus shifts to interest income outlook

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Quarter,Earnings,Jpmorgan

Analysts are weighing how the path of U.S. interest rates will bolster banks’ net interest income, or the difference between what lenders earn on loans and pay out for deposits

As U.S. banking giants prepare to report slightly lower first-quarter profits, investors will focus on how much more income executives expect from interest payments this year.is likely to post a 4 per cent drop in earnings per share from the year-ago quarter on Friday, analysts estimated in an LSEG survey. Declines of 35 per cent and 11 per cent are forecast for CitigroupAnalysts are weighing how the path of U.S.

Executives’ commentary this quarter will be more closely scrutinized as the market scales back expectations for the Fed to cut rates three times this year from earlier estimates of six. “There could be an uptick in delinquencies and the consumer-led growth could moderate, but I do not expect it to impact earnings in a big way,” said Chris Marinac, director of research at financial adviser Janney Montgomery Scott.

So far in 2024, Citigroup shares are up 19.9 per cent as of Tuesday’s close, Wells Fargo is about 17 per cent higher and JPMorgan has risen nearly 16 per cent against a roughly 13 per cent gain for the S&P 500 banks index. A revival would boost earnings at Goldman Sachs and Morgan Stanley, whose earnings are more reliant on investment banking revenue.JPMorgan, the largest U.S. lender, said in February that its markets revenue could decline 5 per cent to 10 per cent in the first quarter.

 

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