Seeking Alpha

Earnings at top five banks seen taking major hit

Analysts have cut their earnings estimates for the top five U.S. banks by over $1B in total, due to increasing fears about a sharp fall in trading revenue - especially from fixed-income operations - and higher legal costs.

JPMorgan (JPM) has been particularly affected, with consensus for net income down $526M to below $5B. The company's legal woes are seen adding $2B to expenses.

Analysts have lowered their net income for Bank of America (BAC) by $128M, for Goldman Sachs (GS) by $123M, for Morgan Stanley (MS) by $97M, and for Citigroup (C) by $210M. The latter has already reportedly told investors about a sharp drop in trading revenues.

Banks had hoped a big September would help offset a slow summer, but that hasn't happened.

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Comments (8)
    , contributor
    Comments (131) | Send Message
    This confirms what many of us have long thought, that
    Wells Fargo (WFC) is and remains the best and surest
    and safest way to play the financial sector. Wells is a
    a different model.
    30 Sep 2013, 04:42 AM Reply Like
  • spinrbait
    , contributor
    Comments (584) | Send Message
    frank wells is a different model, but mortgages are down. i think wfc has lowered earnings estimates too. i know they laid off several thousand in the mortgage depts. i'm not saying they aren't a great co. they are.
    30 Sep 2013, 07:32 AM Reply Like
  • Colin Doyle
    , contributor
    Comments (762) | Send Message
    True but you pay for it.
    30 Sep 2013, 01:30 PM Reply Like
  • earthtodan
    , contributor
    Comments (338) | Send Message
    What do (WFC) fans think of (USB)?
    30 Sep 2013, 03:38 PM Reply Like
  • TBV
    , contributor
    Comments (153) | Send Message
    Old news... keep looping why?
    30 Sep 2013, 06:50 AM Reply Like
  • canb888
    , contributor
    Comments (513) | Send Message
    What are the analysts who told people to sell Canadian banks and buy US banks saying now? The big six Canadian banks are refreshing all time highs lately with two of them making new all time highs and another two just 20 cents and 50 cents from all time highs today as the broad market is falling. No sub-prime housing bubble, steady but rising domestic earnings, dividends of over 4% growing at about 4% per year, IRR of 16% to 19%, that's a quick description of the Canadian big six banks.
    30 Sep 2013, 11:06 AM Reply Like
  • Colin Doyle
    , contributor
    Comments (762) | Send Message
    Lol. That's "analysts" for you.
    30 Sep 2013, 01:31 PM Reply Like
  • joshblake21
    , contributor
    Comments (4) | Send Message
    Analysts miss the direction of BAC consistently for the last 18 months. BAC just sold a $1.5 billion stake in China Construction Bank. They also have the most to gain from the rise in home values transferring loss reserves from liabilities to assets on their balance sheets. All bank stock prices will likely go down as we go into earnings except BAC. They are the only one who does not need to increase their earnings to increase stock price. They can do this through improvements to their balance sheet, expense reduction, and asset sales. I think BAC does exactly what it did in July...surprises to the upside and experiences a stock rally above the $15 a share price. Their price to earnings multiples is still priced as a distressed stock...this won't last!
    30 Sep 2013, 02:49 PM Reply Like
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