Get ready for round two of US bank earnings, with Goldman Sachs, Morgan Stanley and Bank of America reporting this week

Hayley Kirton
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Better than hoped for earnings last week helped to lift shares in the US (Source: Getty)

Wall Street investors are likely eyeing this week with trepidation, as a slew of US financial giants gear up to release quarterly earnings.

Bank of America will kick off the week, releasing third quarter earnings on Monday. Goldman Sachs will report on Tuesday, Morgan Stanley on Wednesday and Bank of New York Mellon on Thursday.

Bank of America is forecast for a small boost in revenues, with an analyst poll compiled by Yahoo Finance predicting a 0.1 per cent increase from $20.91bn (£17.16bn) last year to $20.94bn. Earnings per share, on the other hand, are expected to drop to $0.33, down from $0.37.

Goldman Sachs, which comfortably beat analysts' expectation with its half-year results, is predicted to pull in earnings per share of $3.79, up from $2.90 the year before. Meanwhile, revenues are expected to grow to $7.4bn, up 8.2 per cent on last year's $6.9bn.

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Morgan Stanley is forecast earnings per share of $0.63, nearly double the $0.34 reported last year, while revenues are predicted to increase 11.3 per cent from $7.3bn to $8.2bn. The bank reported a big increase in litigation costs in its third quarter earnings last year, which dragged profits down.

Bank of New York Mellon is predicted to report earnings per share of $0.81, up from $0.74, while revenues are forecast to increase to $3.9bn, up 1.7 per cent from last year's $3.8bn.

The business environment is not currently kind to lenders' bottom lines, with lower for longer interest rates squeezing profits and increasingly tight red tape pushing up costs. The UK's referendum on EU membership, and subsequent Brexit decision, has also put many investors off making big ticket decisions.

Read more: Citigroup beats expectations but revenues still fall

Shareholders will also likely be paying close attention to any commentary from reporting banks for clues as to how they will rejig their business following the Leave decision.

The Sunday Times recently reported that Goldman Sachs could move as many as one in three London bankers out of the UK in the event of a so-called hard Brexit, although the bank refuted the reports.

"There remain numerous uncertainties as to what the Brexit negotiations will yield in terms of an operating framework for the banking industry," the bank said in a statement. "As a result we have not taken any decisions as to what our eventual response will be, despite media speculation to the contrary."

Meanwhile, speaking to the BBC's Today programme last month, Morgan Stanley president Colm Kelleher warned financial services firms would likely need to shift some parts of their operations elsewhere in Europe in light of the referendum result. The bank's chief executive, Rob Rooney, has reiterated these sentiments when speaking in London more recently.

Read more: Philip Hammond heads for Wall Street to reassure US banking giants

JP Morgan, Citigroup and Wells Fargo all helped to bolster investor sentiment last week when the lenders reported better than hoped for earnings on Friday. The Dow Jones Industrial Average closed up 39.44 points, or 0.2 per cent, for the day at 18,138.38.

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