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  • NEWS Desk Global

US BANKS' PROFITS WILL SHRINK AS THEY BRACE FOR SOURING LOANS




U.S. banking giants are expected this week for lower profits for the fourth quarter after they set money aside to cover souring loans while also paying more to depositors. The largest banks' net interest income (NII) - or the difference between what they earn on loans and pay out on deposits - probably fell on average 10% in the fourth quarter, Goldman Sachs analysts said. An estimated 15% decline in trading revenue will also weigh on earnings. JPMorgan Chase (JPM.N), Bank of America (BAC.N), Citigroup (C.N) and Wells Fargo (WFC.N) report fourth-quarter and full year results on Friday.

Banks' profits will likely be squeezed as they set aside more reserves in the fourth quarter to prepare for customers to default on the loans. Profits could also be curbed by banks paying more to keep depositors' money in their accounts.

Bank of America's earnings per share (EPS) are expected to drop 23% in the fourth quarter versus a year earlier, while EPS at Citigroup and Morgan Stanley will fall 25% and 17%, respectively, according to analyst estimates compiled by LSEG. EPS is predicted to slide 3% for JPMorgan and 2% for Goldman Sachs.

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