US banks expected to report dismal second-quarter earnings

The big US banks from Citi to JPMorgan to Goldman Sachs, Bank of America and Morgan Stanley are braced for weak second-quarter earnings despite an increase in lending to consumers and corporates.

Banks including Citi and JPMorgan have already warned of another weak quarter for fixed income trading, with Citi saying revenue could drop as much as 25 per cent in the second quarter compared to last year and JPMorgan warning revenue could slump by 20 per cent.

Citi is expected to forecast earnings of $3.45 billion (€2.5 billion) for the second quarter, down 17 per cent from a year ago.

JPMorgan, meanwhile, is forecast to report a 19 per cent decline in profits to $5.3 billion.

Analysts are expecting earnings per share of $3.09 for Goldman Sachs and revenues of $7.98 billion, which translates to year-over-year declines of 17 per cent and 7 per cent respectively.

Forecasts for Goldman, which reports tomorrow, have come down since last month following low volatility, an uneventful bond market and the rigged markets scandal.

Bank of America is also expected to forecast lower second-quarter earnings before the market opens on Wednesday.

The consensus estimate is currently 29 cents a share, a decline of 9.4 per cent from 32 cents during the same quarter last year.

Morgan Stanley, which is the only bank forecast to post a rise in net income, is scheduled to report earnings on Thursday.

Analysts are expecting $0.56 in earnings per share on revenues of $8.3 billion.