As U.S. banks prepare to close the books on a tumultuous quarter, analysts say trading revenue and deposits are among the key numbers to watch when lenders report earnings in mid-April.
The ups and downs may have helped banks' trading desks as choppy markets fueled client activity.
"Trading profitability will be one of the key items to watch for after the huge volatility in the market," Stephen Biggar, an analyst at Argus Research in New York, told Reuters. It "can either turn out to be lucrative or unprofitable for some banks depending on the key positions that they have taken," he said.
The effect on broader earnings could yet be "limited," because much of the turmoil occurred in the final month of the quarter, Oppenheimer analysts led by Chris Kotowski wrote in a report on Thursday. Major banks will also have to account for unrealized losses in their longer-term securities portfolios to consider the possibility that the U.S. Federal Reserve will keep interest rates higher for longer, the Oppenheimer analysts wrote. The portfolios will be scrutinized afterA group of 25 banks, including some of the largest in the U.S., had held-to-maturity securities portfolios that equated to 29% of their tangible common equity, Oppenheimer estimated.
Meanwhile, investment banking divisions will probably suffer as topsy-turvy markets discouraged companies from issuing bonds or stocks. Oppenheimer forecast total investment banking revenue will sink 40% in the first quarter from a year earlier for the six largest U.S. banks: JPMorgan, Bank of America, Wells Fargo & Co
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