Stock futures traded mixed on monday as Wall Street braced itself for what is expected to be a strong reporting season, especially for large US banks as the economy improves.
Jp morgan chase (JPM) – Get the report, Goldman Sachs (GS) – Get the report, Wells Fargo (WFC) – Get the report and Bank of America (BAC) – Get the report are among the financial services companies due to report earnings this week.
The six largest banks will produce cumulative drop in income 5% for the second quarter, analysts estimate.
Banking Income: “I want to hear loan growth.”
Problem # 1 for leading investment banks will be trading revenues, which analysts estimate fell 28% in the quarter, Bloomberg reported.
Jim Kramer of TheStreet spoke to PLUS Action Alerts senior analyst Jeff Marks on what he wants to hear from banks this week.
“I want to hear credit growth,” Kramer said. “The American balance sheet is so strong that there hasn’t been a significant rise in credit.”
Kramer also said that he would like to hear about the net interest margin – the difference between what a bank borrows and pays out on deposits – because “people are totally obsessed with it.”
“Are there bad loans?” he asked. “Bad loans continue to decline. But more and more I want to hear what services and fees they provide that are tough enough to be just built-in money. “
Wells Fargo: Positive CEO Comment
Banks also need to become more efficient, Kramer added.
“And the more efficient they become, the greater the profit, then perhaps the focus will not be on the net interest margin,” he said.
Oil prices grew up Kramer recently noted that Wells Fargo is the predominant lender in the oil sector.
Wells Fargo said last week that he will stop offering personal lines of credit and close these checking accounts.
In February federal officials informed Wells Fargo that they accepted the bank’s plan to overhaul its risk management and corporate governance systems.
“I suspect we are getting positive comments from Charlie Scharf, CEO of Wells,” Kramer said. “I think his performance rating will be much better too.”