Over the weekend, we published the "Complete earnings playbook" laying out the goalposts for Q2 earnings season which begins officially tomorrow when the big money center banks report. We now narrow it down further by looking at just the bank sector through the eyes of the Goldman bank specialists Alex Mitola and Christian Degrasse who remind us that JPM, WFC, C, BK, STT and BLK all report tomorrow.
First, we start with a discussion of what’s most in focus for bank EPS:
NII: How has trajectory changed with improved rate environment (less cuts, steeper curve), improving loan growth, but early signs of select deposit competition
Loan Growth: Activity has notably picked up relative to 1Q in commercial and pockets of consumer, what is the outlook into H2 '25 and how sustainable is this growth
Deposit Costs: With it being over 6 months since the last rate cut, and with loan growth picking up, how competitive is the deposit cost environment getting and what’s the outlook until the next rate cut?
Capital Markets: 2Q was volatile but improved over the course of the quarter – how do current pipelines look and could we see a pickup in conversion in 3Q?
Capital Return: Optimism given SLR reform, SCB declines, broader prospects of regulatory capital relief. Focus from here will be on timing and magnitude of capital return
Credit: Consumer credit is improving while expectations around commercial credit are benign /potential for loan growth and weakening Moody’s scenario to result in bank reserve builds
Consumer: Commentary on the health of the consumer (and pace of improvement), any changes in spend across categories and segments?
Valuations: Banks are entering earnings with elevated multiples vs last 10 years, but wider discount to the broader market. Keep eye on 2026 estimate revisions
