Fresh off their best quarter since 2021, banks stocks are set for a high-stakes earnings showdown as Wall Street’s most influential financial institutions, including JPMorgan Chase & Co, Citigroup, Wells Fargo, U.S. Bancorp, and Bank of America, prepare to report their quarterly earnings. Expectations aren’t high for banks’ Q4 earnings as three of the biggest U.S. banks, JPMorgan Chase, Bank of America, and Wells Fargo, are expected to show a decline in profits due to NIM pressure and one-time items. One key factor to watch will be the drop in treasury yields, which could impact the banks’ earnings. Falling bond yields provided hope for financially constrained U.S. banks in the fourth quarter, but not soon enough to fend off a pile-up of bad loans.

Earnings Showdown for Major U.S. Banks

Friday, January 12, is a crucial day for the banking industry as several major U.S. banks report their quarterly earnings. JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and U.S. Bancorp are among the financial institutions set to disclose their financial results. The upcoming Q4 earnings reports are anticipated to reveal a decline in profits for some banks, attributed to factors such as NIM pressure and one-time items. In particular, banks are bracing themselves for the impact of falling treasury yields on their earnings. Despite the hope offered by the drop in bond yields in Q4, banks still faced challenges due to a building pile-up of bad loans.

Key points to note from the upcoming bank earnings:

1. JPMorgan Chase, Bank of America, and Wells Fargo are expected to report declines in profits.
2. The main factor to watch will be the drop in treasury yields.
3. Falling bond yields provided some relief for financially constrained U.S. banks in Q4, but not enough to avoid a pile-up of bad loans.
4. Investors’ optimism about the prospects for the largest U.S. banks may be dampened by the threat of souring loans.

“The big thing to watch will be the drop in treasury yields,” says Colin Cieszynski, chief market strategist at SIA Wealth Management. “Falling bond yields provided hope for financially constrained U.S. banks in the fourth quarter, but not soon enough to fend off a pile-up of bad loans.”

To summarize, major U.S. banks such as JPMorgan Chase, Bank of America, and Wells Fargo are expected to report lower profits for the fourth quarter. The decline in earnings is attributed to various factors, including NIM pressure and one-time items. Additionally, the drop in treasury yields will be a critical factor to monitor, as it can impact the banks’ earnings. Despite the hope brought by falling bond yields, U.S. banks still faced challenges due to a growing pile-up of bad loans. This impending decline in profits could dampen investors’ optimism about the prospects for the largest U.S. banks.