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How Banking Stocks Could Perform in the Second Quarter

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May. 28 2018, Updated 10:31 a.m. ET

Q2 expectations

Amid rising rates, credit offtake is expected to be subdued for bankers in the second quarter. Market volatility could result in better trading results on a YoY basis. Thus, non-interest income would play a key role in boosting bankers’ operating performance.

Wells Fargo (WFC) is expected to post EPS (earnings per share) of $1.13 and $1.18 in the second and third quarter, respectively. The bank’s revenues are expected to decline 2.2% and 0.30%, respectively, during the same period, on a YoY basis. The bank is facing fresh compliance controversies amid lower credit offtake.

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Peers lead in performance

Among other major bankers (IYF), Bank of America (BAC) has continued with its expansion across the segments with investments in technology. The bank is expected to post EPS of $0.64 and $0.65 in the second and third quarter, respectively, with YoY growth of 39% and 35%. The bank’s revenues are expected to rise 0.70% in the second quarter, reflecting major growth coming from tax cuts, lower spending, and higher efficiency.

On the other hand, Citigroup (C) is expected to post EPS of $1.58 in the second quarter, an increase of 23% on a YoY basis. The bank’s revenue is expected to rise 3.9%. Its efficiencies, trading income, and lower taxes could help it improve its bottom line.

The biggest US banker, J.P. Morgan (JPM) is expected to post EPS of $2.23 in the second quarter, an increase of 22.5%. The bank’s top line is expected to see strong growth of 6.5% helped by trading, net interest income, and investment banking fees.

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