Banks Get Ready To Kick Off Third Quarter Earnings
Third quarter earnings season is just around the corner, unofficially beginning on October 15 with the results from investment bank JPMorgan Chase, as well as Citigroup and Wells Fargo. Bank of America will report the following day.
Despite the lowered interest rates the banks earnings are expected to have held up well, but that might not be the case heading forward as banks will be facing substantial headwinds from the dovish demeanor the Federal Reserve has been adopting.
The third quarter will be good for the banks, with only the health care sector expected to see a larger uptick in earnings per share versus the same quarter last year. Given the huge stock repurchases the banks have been undertaking this isn’t all that impressive.
The coming quarters will see the effect of two rate cuts in the third quarter, and that isn’t likely to help the banks in the least. And more cuts are almost certainly coming based on the dovish tone of the latest Federal Reserve monetary policy meeting minutes. That will put additional pressure on the banks as we head into 2020.
A further negative sign for banks has been that analysts are now beginning to lower their earnings estimates for the banking sector, and their price targets for the stocks in that sector.
Those interested in third quarter results will be interested to know that Citigroup is expected to see the greatest growth in EPS, while Goldman Sachs is expected to have the worst drop in EPS versus the same quarter last year.
