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Banks' Q4 earnings start next week amid lowered expectations

Jan. 11, 2019 3:37 PM ETCitigroup Inc. (C) StockXLF, IYF, IYG, VFH, BAC, JPM, GS, C, MS, WFC, RSPF, UYG, FXO, SEF, FAS, FAZ, RWW, BTO, FINU-OLD, FINZ, FNCL, JHMF, FAZZBy: Liz Kiesche, SA News Editor46 Comments
  • Citigroup (C +1.1%) starts off the Q4 earnings season Monday, amid analyst reports conveying muted expectations. Analysts have been trimming earnings estimates and cutting ratings, with Goldman Sachs (GS +0.3%) estimates reduced the most, according to Bloomberg.
  • Citi warned last month that it may fall "slightly short" of its 2018 efficiency target as fixed-income trading revenue and investment banking revenue decline from a year ago, but equity trading revenue will increase.
  • JPMorgan Chase (JPM -0.3%) says trading results are "roughly equivalent" to last year.
  • A quiet Q4 for equity issues and M&A will affect investment banking revenue. Healthy loan growth, though, should bolster net interest income.
  • “Overall, we expect accelerating loan growth versus recent quarters, stable to slightly higher NIMs, low single digit quarter on quarter NII growth, stable credit quality, and challenging capital markets income,” according to a note by UBS analysts led by Saul Martinez.
  • But investors and analysts will be keeping an eye on credit quality metrics for signs of danger.
  • Goldman's results will be scrutinized to see how much the 1MDB Malaysian fund scandal is costing the bank.
  • JPMorgan Chase and Wells Fargo (WFC +0.5%) report on Tuesday, followed by Bank of America (BAC +0.9%) and Goldman Sachs on Wednesday, and Morgan Stanley (MS +0.1%) on Thursday.
  • Previously: Wall Street scales back expectations on bank earnings (Jan. 7)
  • ETFs: XLF, FAS, FAZ, VFH, UYG, FNCL, IYF, BTO, IYG, RYF, FXO, SEF-OLD, FINU, RWW-OLD, FINZ, JHMF, FAZZ

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