Banks

Quarterly profits of US banks may fall back to “pre-normal” levels

Summary

Earnings season, central banks, economic announcements, preparing for life under Biden. Description video: Watch Tom Stevenson’s latest market update as investors brace for earnings season, central banks and economic announcement vie for attention in a busy week and investors prepare […]

Earnings season, central banks, economic announcements, preparing for life under Biden.

Description video:
Watch Tom Stevenson’s latest market update as investors brace for earnings season, central banks and economic announcement vie for attention in a busy week and investors prepare for life under Biden. \nCapital at risk. The value of investments and the income from them can go down as well as up so you may get back less than you invest.\n\nFacebook: https://www.facebook.com/FidelityUK/ \nTwitter: https://twitter.com/Fidelity_UK \nLinkedIn: https://www.linkedin.com/company/fidelityinternational/\nInstagram: https://www.instagram.com/fidelityinternational/

Quarterly profits of US banks may fall back to “pre-normal” levels

This Friday, the largest US banks will begin publishing their fourth quarter results, which may show that profits fell as much as 40% from a year earlier, even before the pandemic broke out..

Quarterly profits of US banks may fall back to 'pre-normal' levels

But investors will focus on finding clues to expected earnings growth in 2021..

«You can see the fourth quarter as a kind of transitional one by looking at some of the challenges of 2020 in retrospect and looking ahead to an improved 2021», – said analyst at Barclays Jason Goldberg (Jason Goldberg).

According to Goldberg, the pandemic has caused a sharp drop in interest rates and a record drop in the difference between what lenders charge for loans and what they pay for money..

The pandemic also pushed major US banks to commit more than $ 65 billion to cover expected credit losses..

IBES Refinitiv estimates that from these low values, banks’ profits could more than double in the first and second quarters of 2021.

Bank shares have risen by an average of 35% since the beginning of November. Effective COVID-19 vaccines have since begun to circulate, Democrats have come to power in Washington with promises of more economic stimulus, and the Federal Reserve has said it will allow banks to buy back shares again, which will increase profits per share..

Analysts raised their forecasts for 2021, but as of last Friday they showed that Citigroup Inc reported a 42% drop in fourth-quarter earnings, while Wells Fargo & Co about 39% drop. JPMorgan Chase estimates & Co suggest a more moderate fall of 5%.

These three mentioned above, banks will report their results on Friday.

Bank of America Corp is expected to report a 33% drop in quarterly profit next week.

Morgan Stanley is also expected to grow 1%, while Goldman Sachs Group Inc is expected to grow 43% on the back of the growth in the share of fast-growing companies in the capital markets..