Whilst JP Morgan and Wells & Fargo are due to report today, Citigroup, BoA and Goldman Sachs are due to give Q1 results tomorrow.Banks have already hinted at how they are being affected. But there are certain points that traders will be watching for:
How much money has been set aside for bad loans? This figure will hint at how bad the banks think the coronavirus crisis could get. Its not all bad news one of the silver linings will be a surge in lending.
Details on the take up of interest holidays, fee waivers and other supportive measures for both workers and companies hit by the coronavirus crisis. These figures will help give scale to the size of the problem in the economy.
Banks comments will be more closely watched than usual. This is because banks touch almost every sector of an economy, they have a huge amount of customer data giving them deep insight, in this case into the coronavirus crisis impact on the economy.
US Banks Earnings 15th April
Citigroup Inc Q1 2020 Earnings, before U.S. market open
No large bank is immune to the negative impact of higher unemployment and lower interest rates. However, Citigroup has the potential to benefit, more than some peers, from the extreme market volatility that we have seen over the past 6 weeks. Trading revenue could increase by mid-single digit % range at Citigroup. Citigroup has told its staff that there will be no layoffs in 2029 as a result of the coronavirus. This, in addition to running a main office plus disaster recovery sites means that costs are stacking up. The focus will be on forward guidance. Consensus revenue: $18.92bn, +2%; Adjusted EPS: $1.85, -1% (compared to Jan ’19)
Bank of America Corp Q1 2020 Earnings, before U.S market open
An economic slowdown and slashed interest rates will impact Q1 earnings. Bank of America is more exposed to lower interest rates than some of its peers. However, with the stock down 40% since February, much of this is already priced in. A big plus for BoA is that it is helmed by the same management team (CEO Brian Moynihan) that navigated the bank through the last financial crisis. Bank of America is well diversified across a wide array of business lines. It has the scale to take market share and seize opportunities in a downturn. Consensus revenue: $22.40bn, -3%; Adjusted EPS: $0.62, -11% (compared to Jan ’19)
Goldman Sachs Group Inc Q1 2020 Earnings, before U.S. market open
Results are expected to be bad. However, a silver lining for GS could stem from its significant presence in the sales and trading business. In 2019 the bank generated around 40% of its revenues from the sales and trading business. Given recent extreme levels of volatility in both equity and debt markets, GS could be well positioned to report strong figures from its trading arm, potentially offsetting some weakness in other segments of its operations. M&A deal making has literally fallen off a cliff in Q1. GS M&A pipeline could also be closely watched. A strong pipeline could indicate a quick return to Business as usual. Consensus revenue: $8.13bn, -7.7%; Adjusted EPS: $3.53, -38% (compared to Jan ’19).