Experts compiled the list of financial companies, which are likely to post disappointing earnings reports. Analysts share the viewpoint that US banks are vulnerable to a slump in global oil prices and a slowdown in China’s economy. The top five American investment banks are expected to report a drop in quarterly profits.
According to Credit Suisse estimates, the five major banks, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, and Citigroup gained revenues worth $8 billion from trading and selling debts. The Q4 print is 15% down from the results of Q3 and 2% higher than the difficult Q4 of 2014.
As a rule, investors enjoy a calm period at the end of any year. However, 2015 was an exception. A protracted slump in oil prices and a crash of China’s equity market aroused jitters among market participants. The beginning of the new year did not bring good news. The diplomatic tensions between Saudi Arabia and Iran deteriorated. Besides, North Korea caused political turbulence.
UBS AG analyst Brennan Hawken was harsh and described the trading results as “really bad.” Experts foresee lower net incomes of large banks in the final quarter of 2015 compared to Q4 a year ago. Bank of America CEO and President Brian Moynihan also gave a pessimistic forecast of the bank’s financial results in Q4. “Many investors hoped the situation would change for the better in Q4 mainly in anticipation of the US Fed interest rate hike,” said Gegard Cassidy, RBC Capital Markets analyst. “In fact, their expectations failed,” he added.
