Q3 Earnings Season Starts With The Banks: What Investors Need To Know Before Friday

The banks are set to kick off what will be a closely-watched third-quarter earnings season when they report financial results this coming Friday.

What To Know: JPMorgan Chase & Co JPM, Citigroup Inc C, Wells Fargo & Co WFC, Goldman Sachs Group Inc GS, Charles Schwab Corp SCHW, U.S. Bancorp USB and PNC Financial Services Group Inc PNC are among those scheduled to report at the end of the week.

Broader markets have been volatile for most of the year. Last month, the Fed raised its benchmark rate by 0.75% for the third straight time, bringing the target fed funds rate up to a new range between 3% and 3.25%, the highest levels seen since before the 2008 financial crisis.

Rising rates increase borrowing costs, which banks pass through to consumers by charging more for loans. As higher rates make it more expensive for consumers to borrow, borrowing demand is expected to slow. 

As a result, many analysts are anticipating a drop in bank earnings. Here's what to watch for when the bank's report on Friday.

• JPM Revenue Estimate: $32.06 billion
• JPM EPS Estimate: $2.92

In the third quarter of 2021, JPMorgan beat expectations when it posted earnings of $3.74 per share on quarterly revenue of $30.44 billion. Last quarter, JPMorgan missed estimates when it reported earnings of $2.76 per share on revenue of $31.63 billion. Analysts had been anticipating earnings of $2.91 per share, according to Benzinga Pro.

See Also: Jamie Dimon Warns Of US Recession In 6-9 Months: JPMorgan Preparing For 'Economic Hurricane'

• C Revenue Estimate: $18.32 billion
• C EPS Estimate: $1.57

Citigroup easily topped expectations for earnings of $1.69 per share last quarter when it reported earnings of $2.19 per share. The company also posted a top-line beat. In the third quarter of 2021, Citigroup reported earnings of $2.15 per share, which beat estimates of $1.68 per share.

• WFC Revenue Estimate: $18.75 billion
• WFC EPS Estimate: $1.10

Wells Fargo missed earnings estimates last quarter. The company reported earnings of 74 cents per share, which came in below average analyst estimates of 86 cents per share. In the third quarter of 2021, Wells Fargo reported earnings of $1.17 per share.

• GS Revenue Estimate: $11.43 billion
• GS EPS Estimate: $7.71

In the same quarter in 2021, Goldman Sachs reported earnings of $14.93 per share, which easily beat estimates of $10.11 per share. The bank missed earnings estimates at the end of 2021, but has turned in an upside surprise in each quarter since.

• SCHW Revenue Estimate: $5.41 billion
• SCHW EPS Estimate: $1.06

Charles Schwab has reported results that have been roughly in line with analyst estimates for the last seven quarters. The bank has not missed or beat expectations by more than 8% since 2020. In its most recent quarter, Schwab reported earnings of 97 cents per share, topping estimates of 92 cents per share. 

• USB Revenue Estimate: $6.24 billion
• USB EPS Estimate: $1.17

U.S. Bancorp delivered an upside surprise when it beat earnings estimates by 12% in the third quarter of 2021. In the company's most recent quarter, U.S. Bancorp reported earnings of $1.09 per share, which narrowly beat average estimates of $1.08 per share. The bank reported quarterly revenue of $5.98 billion, beating estimates of $5.88 billion.

• PNC Revenue Estimate: $5.41 billion
• PNC EPS Estimate: $3.71

In the third quarter of 2021, PNC reported earnings of $3.68 per share, which beat average estimates of $3.22 per share. In the company's most recent quarter, PNC reported quarterly earnings of $3.42 per share, which beat estimates of $3.14 per share. PNC has delivered eight straight quarters of earnings beats.

All of the aforementioned banks are scheduled to report third-quarter earnings before the market opens on Friday. All earnings estimates are from Benzinga Pro.

Photo: Ian Sane from Pixabay.