The largest banks in the US are preparing for a third quarter marked by shrinking margins and falling profits, according to a new report.
JPMorgan Chase and Wells Fargo will publish their quarterly results on Friday.
JPMorgan is expected to post an earnings per share decline of almost 8%, while Wells Fargo is likely to report an earnings per share decline of almost 14%, Reuters reports, citing data compiled by the London Stock Exchange Group (LSEG).
Next week, Bank of America is expected to report a decline in earnings per share of about 14%, Citigroup is expected to report a decline of 20% and Goldman Sachs is expected to report a decline of 35%.
The decline across the board is due to a combination of rising deposit costs, weak loan demand and falling net interest income (NII).
Although banks are feeling pressure from shrinking margins, they are expected to generate strong revenues from other banking divisions such as investment banking and trading.
Analysts at Oppenheimer say delinquencies on consumer loans have declined, noting that banks have also built up significant reserves to cover potential losses on office loans.
Oppenheimer also expects the industry to see investment banking revenues decline 7% on average for all banks, and that banks may report a decline in trading revenue due to a seasonal decline in volume.
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