4 Must-Own Bank Stocks Ahead Of Q4 Earnings
Zacks Investment Research | Jan 13, 2020 07:34AM ET
Big U.S. banks are expected to see a feeble start to the earnings season this week. And it’s primarily because of the Fed trimming interest rates three times last year after nine hikes in the previous three-year period. Drop in business investments, consistently low inflation and trade-related issues were cited as the reasons behind the rate cuts. At the same time, President Trump wanted the Fed to slash rates more aggressively, thanks to record-low unemployment levels.
Decline in interest rates nonetheless adversely impact net interest margins. Needless to say, a bank’s profit margin depends on its net interest income or the difference between the rates they charge as long-term loans and the rate they pay for short-term borrowings.
For fourth-quarter earnings, the Major Banks industry, including JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC), is expected to see an earnings decline of 9.6% from the same period last year despite 1.4% higher revenues (read more: Zacks Investment Research
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