US bank earnings will kick off next week, with analysts at Bank of America expecting management teams to strike a cautious tone amid policy uncertainties and slowing customer activity.
While credit deterioration is not yet a major concern, there may be macro-driven reserve builds as banks adjust for downside risks, analysts added.
Strong trading revenues could drive upside to their earnings estimates, with JPMorgan and Goldman Sachs seen as best positioned to outperform expectations.
JPMorgan
The analysts raised their Q1 earnings per share estimate for to $4.71 from $4.58, above the $4.57 consensus, citing strong trading and investment banking revenues.
CEO Jamie Dimon’s commentary on the macroeconomic environment and regulatory landscape will be closely watched.
The bank’s full-year 2025 net interest income (ex-markets) guidance of $90 billion is seen as defensible in the absence of rapid rate cuts.
The analysts believe that the stock’s valuation may not be attractive enough for management to increase buybacks, which are currently assumed at around 100% total payout.
Goldman Sachs
The analysts also raised their Q1 EPS estimate for Goldman Sachs Group Inc (NYSE:GS, ETR:GOS) to $12.98 from $12.25, exceeding the $12.52 consensus.
While tougher trading and M&A advisory comparisons against JPMorgan and peers may temper growth, the potential for a headline earnings beat remains, driven by strong markets revenue, Bank of America believes.
Wells Fargo
The analysts downwardly revised their Q1 EPS forecast for to $1.17 from $1.23, versus the $1.24 consensus but noted the stock “remains a top idea for us.”
They attributed this to a conservative fee forecast despite expectations for a trading rebound to approximately $1.4 billion quarter-over-quarter.
Investment banking may benefit from market share gains, but equity gains are expected to drop off significantly after a strong $715 million performance in Q4 2024.
The key issue for Wells Fargo remains the ongoing asset cap imposed by regulators, which continues to limit growth potential.“[Wells Fargo] needs asset-cap removed to clear the decks for both management and the Street to reframe the risk/reward,” analysts wrote.
Citigroup
The analysts raised their Q1 EPS estimate for Citigroup Inc (NYSE:C) to $1.86 from $1.83, slightly below the $1.89 consensus.
“While results may not be a catalyst, these could serve as a clearing event into the June stress test results where we expect Citi to see some capital relief,” they wrote.
The pace of buybacks remains a key focus, with analysts assuming $1.5 billion in repurchases for Q2 2025, ramping up to $3 billion per quarter in the second half of the year.
Citigroup’s ability to defend its pre-provision net revenueagainst a weaker revenue environment will also be closely watched.
Morgan Stanley
For Morgan Stanley (NYSE:MS), the analysts reduced their Q1 EPS estimate to $2.23 from $2.24, below the $2.29 consensus, which includes approximately $150 million of drag related to severance charges.
“Equities trading strength and lagged impact on wealth from market weakness (more a Q2event) should combine for a strong Q1 2025,” they believe.
Investors will closely monitor net new asset growth, which has averaged several billion dollars per quarter over the past year, as a key indicator of future acceleration, the analysts added.
US bank earnings will kick off with JPMorgan, Wells Fargo, Morgan Stanley and Bank of New York Mellon starting Friday, April 11.
