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Citigroup, JPMorgan Chase and Wells Fargo will report third-quarter results Friday, and expectations are very positive.
Among factors that could result in strong quarterly results, which lower banks' expenses, and the Federal Reserve 's interest rate, which boosts banks' revenue.
According to Bank of America Merrill Lynch, the consensus estimate is for third-quarter-year-over-year earnings growth of 20.7 percent and revenue growth of 7.1 percent. But the bank noted that the results could exceed their expectations.
Analysts polled by Refinitiv expect JPMorgan Chase to earn $ 2.26 per share on the income of $ 27.57 billion. In the second quarter, JPM earned $ 1.76 per share on revenue of $ 26.2 billion.
Citigroup is forecast to earn $ 1.69 on revenue of $ 18.45 billion. In the second quarter of this year, Citigroup earned $ 1.63 per share and revenue came in at $ 18.46 billion.
Wells Fargo is forecast to earn $ 1.17 per share on revenue of $ 21.9 billion. In the second quarter, Wells Fargo missed expectations for $ 0.98 per share on revenue of $ 21.6 billion. The quarterly earnings per share included a discreet income tax expense of $ 0.10 per share.
As always, analysts will be looking for information on the growth of growth and trading.
The yield curve will also be another topic of conversation and the way banks are preparing the yield curve flattens. A flattening yield curve often signals investor concern about the economy and, thus, a preference for bonds over stocks.
Because analysts expect robust quarterly performance, it can take a surprisingly strong report to investors.
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Bank stocks are, overall, lagging the general market, with the S & P 500 financials index down 2.6 percent year to date, while the S & P 500 is up 3.11 percent.
Of the three banks, share price performance this year has been varied. JPMorgan Chase's shares are up about 2.5 percent year-to-date, Citigroup's shares are down over 6 percent year in date, and Wells Fargo's shares are down almost 14 percent.
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