Lloyds Banking Group PLC (LSE:LLOY) and other leading UK banks will cast a nervous eye across the pond today as some of the big beasts of the US banking world provide their first financial updates since the turmoil which followed the collapse of Silicon Valley Bank in March.
Investors will be particularly keen for updates on deposit flows, margins and the proportion of deposits lenders invested in longer-dated securities like US Treasuries and mortgage-backed securities when interest rates were low.
Bad debt provisions will also be a focus for evidence of the depth of any slowdown in the US economy.
Banking share prices have gradually recouped most of their losses in the wake of the banking chaos which also claimed the scalp of Credit Suisse in Europe, forced into a marriage with Swiss rival UBS.
JPMorgan, Citi and Wells Fargo report earnings today, followed by Bank of America on April 18.
Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), which have businesses that skew more towards investment banking, trading and asset management, report earnings on April 18 and 19, respectively.
For the first quarter, JPMorgan is expected to report earnings per share of $3.40 on revenue of about $35.7 billion. In the year-ago quarter, the bank posted earnings per share of $2.63 on revenue of $31.6 billion.
CMC Markets UK chief market analyst Michael Hewson noted that when JPMorgan reported its 4Q earnings in January, it painted a cautious outlook for the US economy, despite a strong end-of-year showing.
Wells Fargo is expected to post earnings per share for the first quarter of $1.14 on revenue of about $20 billion, compared to earnings per share of $0.88 on revenue of $17.6 billion for the same period in 2022.
Wells Fargo is expected to have seen some deposit inflow as a result of the recent turbulence in the US banking sector, Hewson noted.
“A much more domestically focused bank, the shares saw a much bigger decline on the back of the recent turmoil sliding to two-year lows before rebounding,” Hewson said.
He said that back in January the bank reported a disappointing set of 4Q numbers, however, this was largely expected due to various legacy issues around litigation and regulatory issues.
At Citigroup, some deposit inflow is also expected as US customers steer their funds towards the bigger and safer US banks is also expected, according to Hewson.
“The share price has seen a modest recovery over the last couple of weeks, but the gains have been limited,” he said.
For the first quarter, Citigroup is expected to post earnings per share of $1.17 on revenue of about $20 billion. For 1Q 2022, it reported earnings per share of $2.02 on revenue of $19.2 billion.