Big Wall Street Banks Provide Mixed Start to Q4 Earnings Season

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Note: The following is an excerpt from this week’s Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>

It is still relatively early in the 2021 Q4 reporting cycle, with the big banks skewing the aggregate numbers. Results are mostly in-line with expectations, with no major surprises in the growth rates, beats percentages and management guidance that we have seen thus far.

With respect to the banks, higher-than-expected costs at JPMorgan JPM and Goldman Sachs GS haven’t turned out to be an industry-wide trend, as shown by results at Bank of America, Morgan Stanley and others.

The recent uptrend in Treasury yields will have a beneficial impact on the group’s results in the long run, but most banks did report favorable trends in loan demand and continued strength in the capital markets business, though below the preceding quarter’s record pace. All in all, a mixed start to the reporting cycle for the Finance sector.

Looking at Q4 as a whole, total earnings for the quarter are expected to be up +21.5% from the same period last year on +12.0% higher revenues.

The growth pace decelerates significantly in the following periods, as you can see in the chart below that provides a big-picture view of earnings on a quarterly basis.

Image Source: Zacks Investment Research

The chart below shows the overall earnings picture on an annual basis, with the growth momentum expected to continue.

Image Source: Zacks Investment Research

We remain positive in our earnings outlook, as we see the overall growth picture steadily improving, as the near-term logistical issues get addressed.

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