Big U.S. financial giants gained in Q1 as the coronavirus pandemic caused harsh market swings, analysts reported, but those profits will likely be outweighed by drops in other businesses and gloomy outlook for the rest of 2020.
Trading revenue data could reach up to 20 percent growth after five major Wall Street banks, including JPMorgan Chase & Co, Bank of America Corp, Citigroup, Goldman Sachs Group and Morgan Stanley – report fresh numbers, which analysts await this week, following 5 estimates offered by Reuters.
A dark spot was pictured by a sixth, Chris Kotowski of Oppenheimer & Co, who indicated double-digit revenue decreases for certain banks because “these kinds of markets almost always lead to some trading inventory losses. With all this, Kotowski favors financial institutions with heavy exposure to trade, making bets they will get better results than those with large lending businesses.
That glum optimism reflects the current state of banking today.
The last time Wall Street banks showed the present dynamic in Q1 2009. Investors had fears regarding the current serious trouble, which experience banks only to figure out that government stimulus programs are enough to back the economy through most part of that year. But pandemic volatility may turn out to be quite different, analysts added.
Banks have restructured their trading businesses since 2009, and sharp trading activity have become much more fleeting, even when they are extreme.