Q2 Earnings Season Kicks Off: Jury Still Out Despite Mixed Bank Results

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Citigroup Inc,Bank Of America Corp,Goldman Sachs Group Inc

Stocks Analysis by Christine Short covering: S&P 500, Citigroup Inc, Bank of America Corp, Goldman Sachs Group Inc. Read Christine Short's latest article on Investing.com

Banks kicked things off with mixed results, but overall top and bottom-line results were good enough to boost S&P 500 growth ratesBank Results Come in Mixed, Economic Headwinds Persist but for How Much Longer?

And while all the banks that have reported thus far have surpassed Wall Street estimates on the top and bottom line, according to FactSet data, there are still headwinds at play that have some banking executives remaining cautious.record profits due to higher investment banking fees, it was a surprising increase in loan loss provisions - to $3.05B vs. expectations of $2.78B - that offset otherwise decent Q2 results.

But what they didn’t gain in investment banking fees, they offset with their decreasing exposure to consumer loans, which allowed the bank to cut their credit loss provisions by 54% YoY.), was able to grow investment banking fees by 51% YoY, but similar to WFC and BAC reported NII that plummeted 17% YoY due to lower deposit levels.

Add to that the reassuring comments from Federal Reserve Chairman Jerome Powell at the Economic Club of Washington D.C. on Monday, that the central bank would not wait until inflation was down to 2% to cut rates. The LERI tracks outlier earnings date changes among publicly traded companies with market capitalizations of $250M and higher. The LERI has a baseline reading of 100, anything above that indicates companies are feeling uncertain about their current and short-term prospects.

Some of that uncertainty was evident in banking commentary . As of July 12, there were 66 late outliers and 37 early outliers.This week will continue on with more results from the financial sector, mainly regional and diversified banks.This season peak weeks will fall between July 22 and August 16, with each week expected to see over 1,000 reports. Currently, August 8 is predicted to be the most active day with 1,445 companies anticipated to report.

 

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