Banks in focus as US earnings season prepares to kick off

The US earning season is likely to kick off with a bang this week as some of the largest banks and financial services companies report their earnings. Overall US markets showed good growth in the first quarter of this year with the Dow Jones Industrial Index rising almost 17% and the S&P 500 by 13%. Banks and finance companies are expected to mirror and exceed that growth, partially because of many of them made large one-off write-downs in their fourth quarter earnings to accommodate the changes in US tax legislation.

The US earning season is likely to kick off with a bang this week as some of the largest banks and financial services companies report their earnings. Overall US markets showed good growth in the first quarter of this year with the Dow Jones Industrial Index rising almost 17% and the S&P 500 by 13%. Banks and finance companies are expected to mirror and exceed that growth, partially because of many of them made large one-off write-downs in their fourth quarter earnings to accommodate the changes in US tax legislation.

One US banks due to report on Friday, JP Morgan, is expected to show the highest increase in earnings in the first quarter of this year mainly due to stronger activity on the investment banking side promoted by a stronger activity on the stock markets. A poll of analysts compiled by Nasdaq is forecasting that the bank’s earnings per share will increase to $2.28 from $1.07 in the fourth quarter of 2017. Overall, the bank’s net profit is pegged to rise by around 38% from $25.45 billion in the previous quarter.

Money manager BlackRock, which owns the iShares ETFs, is expected to report an increase of 19% in net profits on Thursday, and Citigroup, also reporting on Friday, is pegged to show a similar level of growth. Wells Fargo, which has less exposure to capital markets, is expected to report a 7% increase in profits.

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