The major banks on Wall Street this month are expected to report a 2021 profit report due to bank overdrafts and lower losses than expected on credit during the epidemic, experts warn it could take years to recoup its earnings.
Citigroup and JPMorgan Chase are the first major banks to submit results for the fourth quarter, reporting on January 14. They are followed by Goldman Sachs on January 18, and then Morgan Stanley and Bank of America on January 19.
Among them, analysts predict all but Citi will report their annual profits, according to a comparison made by Bloomberg with a history acquired from S&P Capital IQ.
“You have to go by 2024 before the funds are even lower than they were in 2021,” says Matt O’Connor, chief research officer at Deutsche Bank.
However, a hope The rising interest rate with the Federal Reserve in 2022 feeds the bank’s hopes of establishing another strong new year.
“We expect the bank’s shares to continue to flourish in the market by 2022,” Jason Goldberg, a Barclays researcher, wrote to clients this week.
The findings in 2021 were marred by the release of savings banks set aside to repay debts that they could incur from debt they feared could be devastating as a result of the epidemic.
The losses have been much lower than they were. Goldman analysts comparing the seven major cover banks, which include JPMorgan and Bank of America, have now released $ 36bn of the $ 50bn they originally offered in anticipation of a debt loss.
Banks have also benefited from blockbuster banking, with global mergers and acquisitions in 2021. to know their highest levels from scratch.
“People do not believe that, especially for cash-strapped businesses, these segments that took place in 2021 are normal,” said Devin Ryan, an analyst with JMP Securities.
After such a big year, investors question whether 2021 represented “higher profits” in major banks, according to Richard Ramsden, a banking expert and Goldman Sachs.
“What investors are trying to figure out is, has the market increased in price or has it reduced the price set by banks?” Ramsden said.
Right now the market is pricing in another good year for banks. US bank shares rose 35 percent in 2021, according to Deutsche Bank experts, winning the S&P 500, and again in the first few days of 2022.
Advertisers bet on rising interest rates to revive the bank’s interest in debt. The debt demand, which was delayed in 2021 amidst a plethora of government incentives, has also shown signs of success, which has recently taken place with the Fed.
Experts predict that the higher the income from debt rather than the loss of savings, the more likely it is that the bank’s stock will look good in the market, even if the total amount is less than a year old.
“It is fitting that the year 2022 is a turning point in which the revenue they earn is going well but what has been said is declining,” O’Connor said.
The high demand for loans at the highest level can also help banks to get the most out of their large deposits during the epidemic. At JPMorgan, the largest U.S. bank and commodity, deposits rose more than 50 percent from late 2019 to September 2021 to $ 2.4tn.
“When prices start to rise,” says Keith Horowitz, a US banking expert at Citigroup, “that’s when you start to see the real value of the deposits.”