US Banking Heavyweights Set To Release Q2 Results: What To Watch For

American banks’ earnings season is nearly here, with some industry heavyweights set to announce their second-quarter results on Friday, July 14.

JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC), BlackRock Inc. (NYSE:BLK), Citigroup (NYSE:C), and State Street Corp. (NYSE:STT) will be among the first to report.

Goldman Sachs (NYSE:GS) will report on Monday, July 17, while the day after it will be the turn of Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), Charles Schwab (NYSE:SCHW) and Bank of New York Mellon (NYSE:BK).

What Happened in the Banking Industry Last Quarter?

Concerns about the U.S. banking sector that had arisen following the March bankruptcy of Silicon Valley Bank and Signature Capital subsided throughout the second quarter.

Although there were initial worries that bank failures would cause a credit crunch, this event did not materialize, and the Fed has frequently emphasized the robustness and safety of the U.S. financial system.

May and June were favorable months in financial markets, following a strong rally in the SPDR S&P 500 ETF Trust (NYSE:SPY) and the Invesco QQQ Trust (NASDAQ:QQQ).

In the second quarter, the financial sector, ras tracked by the Financial Select Sector SPDR Fund (NYSE:XLF), posted a 5.44% gain. However, regional banks, tracked by the SPDR Regional Banking ETF (NYSE:KRE), saw a decline of 4.8%, even with a considerable rebound starting in May.

The top three performers over the quarter among major U.S. banks were Wells Fargo (16%), JP Morgan (13%), and Charles Schwab (10%). The laggards were Morgan Stanley, down 1.6%, and Citigroup, down 0.5%.

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Banks’ Earnings Approaching: What Investors Should Monitor

The impact of rising deposit rates on funding costs, the emergence of any credit normalization or tightening in the face of elevated interest rates, and the aftermath of the regional bank crisis in March are all key areas that investors should keep in mind when analyzing banks’ Q2 earnings reports.

All 23 large U.S. banks passed the Federal Reserve’s stress tests last month, showing that they had enough capital to withstand hypothetical losses of $540 billion in the most adverse scenario.

Investors should also keep an eye on the capital levels of individual banks at the end of the quarter, especially in light of a forthcoming Federal Reserve regulation that will mandate a 2% increase in capital for all banks with more than $100 billion in assets.

Banks’ Q2 Earnings: EPS, Revenue Forecasts, and Expected Quarterly Variation

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