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Pain to ease for US banks

WALL Street banks are expected to have enjoyed an improvement in the second quarter when they report half year results this week.<br /><br />Consensus analysts&rsquo; forecasts for the top US banks suggest that markets improved during the quarter, leading to a surge in investment banking revenues.<br /><br />Morgan Stanley analysts forecast in a recent research note that Bank of America and JPMorgan Chase would see investment banking revenues rise by between 35 and 39 per cent.<br /><br />The bank also predicted a slowdown in the rate of acceleration of non-performing loans across the sector, indicating smaller credit losses in the medium-term future.<br /><br />Goldman Sachs kicks off the Wall Street reporting season tomorrow, after enjoying a 3.4 per cent rise last week, on the back of a note from Bank of America Merrill Lynch, which upgraded Goldman to &ldquo;Buy&rdquo; from &ldquo;Neutral&rdquo;.<br /><br />A consensus forecast estimates that the bank will book a profit of $3.39 (&pound;2.09) per share, following on from the first quarter result of $3.42.<br /><br />PNC is likely to be the other star performer, with analysts predicting second quarter earnings to hit $1.03 per share, up from $0.55 in the first quarter.<br /><br />Stricken titan Citigroup is predicted to continue to be loss-making, with analysts predicting a loss of $0.18 per share and a full year loss of up to $0.40 a share. However, the result would be a remarkable turnaround from last year&rsquo;s full year loss of $5.59 per share.