Second quarter profits at big U.S. banks are expected to fall sharply from a year earlier on increased loan loss reserves, as the pandemic recovery gives way to a possible recession.
Investors will want to hear executives' insights into the health of the economy and if borrowers are "more shaky now," Ware said.
While data on Friday showed the U.S. economy added more jobs than expected in June, it could still be on the verge of a recession. Gross domestic product contracted in the first quarter, with tepid consumer spending and manufacturing readings in the last two weeks.Last month, JPMorgan CEO Jamie Dimon warned of an economic "hurricane," while Morgan Stanley CEO James Gorman has said there is a 50% chance of a recession.
As a result, the banks' bottom lines will look worse than their underlying businesses. Pre-provision, pre-tax profits for the big four will be down only 7%, according to estimates by analysts led by Jason Goldberg at Barclays. But bank executives have said more loans will go bad. Analysts will press the banks for clues on the timing and magnitude and how much they might eventually offset gains in net interest income - the difference between banks' cost of funds and the interest they receive.
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