JPMorgan, Morgan Stanley, and Citigroup to Release Q2 Earnings

Heavily covered so far this year has been the subject of central banks’ monetary policies from Washington to Frankfurt. However, the ongoing fight against inflation could also have secondary effects on the private banking sector in the United States. With some of the largest names in this area of industry set to release quarterly earnings soon, traders may shortly be able to get a better sense of where the winds were blowing in Wall Street boardrooms earlier this year. Let’s take a look at where JPMorgan, Morgan Stanley, and Citigroup are expected to land this week:

JPMorgan Revenues Jump?

JPMorgan (JPM) is expected to release its second-quarter results this Thursday before markets open. Analyst predictions are that the firm’s earnings per share (EPS) figure will come in at $2.94, a more than one-fifth decline from Q2 2021’s results. However, sales for the second quarter could reach nearly $32 billion, almost 7% higher than the year-ago figure. 

So far this year, JPMorgan shares are down by more than 30%. However, market watchers foresee that loan growth will be shown to have remained stable throughout the quarter. Furthermore, investors may want to take an especially close look at outlook guidance regarding credit loss predictions for the near term; although voices raising the spectre of an approaching recession have been growing stronger recently, the average American consumer may still be sitting on some funds accumulated during the pandemic. On the other side of the coin, a slowdown in the mortgage business has led to the termination of hundreds of employees from JPMorgan’s payroll.

Morgan Stanley to Slide?

Industry peer Morgan Stanley (MS) is also set to release quarterly numbers on the 14th before the opening bell rings. Consensus estimates for this venerable player in the financial sector’s EPS have been revised downward to $1.62, which would be a year-over-year decline of more than 14%. Revenues are also predicted to have declined by 6% to under $13.9 billion.

While Morgan Stanley’s earnings have confounded analyst predictions relatively consistently in the past, it’s unclear as yet whether a surprise can help the firm’s stock price recover from the nearly one-quarter decline observed so far this year.

Citigroup Joins the Earnings Party

Another New York-based financial institution, Citigroup (C), is expected to release Q2 results on Friday before market open. Earnings per share are foreseen to be $1.63, a more than 40% decline from Q2 2021. In contrast, analysts predict second-quarter 2022 revenues of $18.1 billion, which would represent year-over-year growth of 3.7%.

Market experts are pointing to a decline in investment banking, as well as the more positive development of subsidiary businesses in Australia and the United Arab Emirates being sold off, as factors that could affect how Friday’s earnings call goes. Citigroup shares have dropped by just under 27% since the top of the year; whether investor sentiment toward this firm could warm back up is still unclear.

Common Challenges

Challenges that have been facing all sectors of the global economy have not spared the United States’ banking sector. The highest inflation seen stateside in over a generation has pushed the Federal Reserve toward the hawkish side of the policy spectrum in the form of rapid interest rate rises, while market volatility has brought major Indices as a whole downward throughout most of the year.

The Federal Open Market Committee’s raising of interest rates affects bank bottom lines in two slightly contradictory ways. While their loan business lines benefit as consumers pay more interest, fewer potential homeowners may choose to apply for mortgages, bringing fees down. Furthermore, other businesses may decide that it is not in their best interest to borrow acquisition funds; analysts are already pointing to a slowdown in investment banking activity for America’s biggest banks.

Currently, the consensus seems to be that these three important institutions will wade through trading during earnings season and come out ahead. While a market retreat, or even a recession, could presumably influence their stock prices, the Fed’s own stress test shows that a significant banking crisis is most likely not in the cards. In any event, traders will have to wait until later this week to ascertain how JPMorgan, Morgan Stanley, and Citigroup fared over the second quarter of this year.