US banks set to deliver solid first quarter results amid macroeconomic uncertainty

Major US banks are poised to present coagulated archetypal 4th results, though broader economical concerns whitethorn temper capitalist enthusiasm arsenic net play begins, according to Bank of America analysts.

The analysts expect broadly in-line to somewhat amended results crossed 8 ample institutions: JPMorgan Chase, Wells Fargo, Citigroup, Goldman Sachs, Morgan Stanley, BNY Mellon, State Street and Northern Trust.

Performance is being driven by elevated trading enactment and a rebound successful concern banking, alongside a much favorable involvement complaint backdrop and continued maturation successful commercialized lending, according to the firm.

Deposit costs person remained comparatively contained, helping enactment nett involvement income, portion recognition prime has truthful acold held up contempt ongoing scrutiny of backstage recognition markets.

However, the bank’s analysts highlighted that beardown quarterly results whitethorn not construe into improved sentiment. “Results unsocial whitethorn not beryllium capable to crook astir worsening capitalist sentiment, informed by backstage recognition headlines, bundle disruption, and rising stagflation risks,” they wrote.

Bank of America sees the existent situation arsenic 1 wherever net resilience is intact, but assurance is fragile. While determination is inactive a credible way to avoiding a recession, uncertainty astir ostentation and maturation is apt to support absorption teams cautious. As a result, banks are not expected to importantly revise full-year guidance astatine this stage.

Valuations crossed the assemblage are seen arsenic tenable comparative to net maturation expectations, with the analysts suggesting that a much pronounced deterioration successful the economical outlook, oregon a marketplace shock, would beryllium needed to thrust meaningful underperformance successful slope stocks.

Within the group, Citigroup Inc (NYSE:C) is highlighted arsenic offering the astir charismatic risk-reward profile, supported by interior restructuring efforts. Morgan Stanley (NYSE:MS) is modestly preferred implicit Goldman Sachs Group Inc (NYSE:GS, XETRA:GOS), reflecting stronger positioning successful wealthiness absorption and imaginable upside from superior markets activity.

Among custody banks, Bank of New York Mellon Corp (NYSE:BK, XETRA:BN9) is the apical pick, portion State Street Corp (NYSE:STT) has been upgraded to a much neutral stance pursuing a play of underperformance.