{"id":13283,"date":"2024-07-22T14:59:58","date_gmt":"2024-07-22T14:59:58","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13283"},"modified":"2024-07-22T14:59:59","modified_gmt":"2024-07-22T14:59:59","slug":"good-and-bad-news-for-u-s-banks-this-earnings-season","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/good-and-bad-news-for-u-s-banks-this-earnings-season\/","title":{"rendered":"Good And Bad News For U.S. Banks This Earnings Season"},"content":{"rendered":"\n

What We\u2019re Seeing This Earnings Season for U.S. Banks<\/strong><\/p>\n\n\n\n

Second quarter earnings for the Financials sector are fully underway, which in my view acts as an important barometer for the underlying health of the U.S. economy. If U.S. consumers are the main engine of the U.S. economy, banks might be viewed as the pedals\u2014speeding up or slowing down overall activity via loan volumes, credit availability, and liquidity.1<\/sup><\/p>\n\n\n\n

A balanced look at the Financials sector and bank earnings landscape means weighing both the positives and negatives. Here\u2019s what I\u2019m seeing in the current environment.2<\/sup><\/p>\n\n\n\n

The Positives<\/strong><\/p>\n\n\n\n

Let\u2019s start with earnings, which arguably hold the highest importance. Overall, the Zacks\u2019 view is that the earnings outlook for major banks has been improving, with stabilizing underlying business trends. We see this in earnings revision trends, where estimates for Q2 have been ticking higher across deposits, trading volumes, and investment banking fees. Early signs show a \u2018better-than-expected\u2019 theme emerging.<\/p>\n\n\n\n

The expectation is for Finance sector earnings to be up +8.3% from the same period last year on +5.6% higher revenues, which would follow the sector\u2019s +11.9% higher earnings on +7.3% revenue gain in the preceding period (2024 Q1). As seen in the chart below, total loan volumes have stabilized following a decline in year-over-year growth over the past year (and following 2023\u2019s regional bank stress). Even still, banks are bringing in more profits from lending than they were two years ago, though profit growth appears to be leveling off as the economy adjusts to higher rates.<\/p>\n\n\n\n

This Earnings Season and Your Investment Portfolio<\/a><\/u><\/strong><\/p>\n\n\n\n

For deeper insights into the current earnings season, Zacks analysis of recent economic and market activity, and detailed forecasts, I’m delighted to present our latest July Stock Market Outlook Report3<\/sup><\/a><\/u><\/em><\/strong>.<\/p>\n\n\n\n

The report also covers key U.S. economic data, highlighting modest GDP growth, rising incomes and spending, cooling inflation, and a mixed labor market. You’ll also find:<\/p>\n\n\n\n