US EARNINGS PREVIEWS – JP MORGAN (JPM), CITI (C), WELLS FARGO (WFC)

*OVERVIEW: Earnings season is set to unofficially kick off today with results from three major banks set to report before the opening bell (see below).

According to Zack’s, S&P 500 earnings are expected to be down 3.7% in Q4 Y/Y, though revenues are seen rising 3.4% Y/Y. The aggregate numbers are likely to be dragged down by the energy sector, where earnings are forecast to decline by around 42% Y/Y, and revenues are seen slipping 4.6% Y/Y.

The finance names reporting this week (JPMorgan, Wells Fargo, Citigroup on Tuesday; Goldman Sachs, BlackRock on Wednesday) will set the tone, given that earnings growth in the finance sector are seen rising 7.5%, with revenue growth of 6.3%). The analysts suggested that earnings have been flat over the last three quarters, which is likely to continue; that said, major banks are seen reporting earnings decline of 9.8%, following the -0.6% in the previous quarter. 

*JP MORGAN (3.2% DJIA weighting) – 06:55EST/11:55GMT

• Q4 EPS is expected to print at USD 2.30 (Prev. USD 1.98 YY), whilst Revenues are seen coming in at USD 27.96bln (Prev. USD 26.8bln YY). Analysts also expect Net Interest Income (NII) at USD 14.06bln and Net Interest Margin (NIM) at 2.35%. Further, provision forecasts stand at USD 1.52bln, NCO at USD 1.46bln and non-interest income at USD 13.2bln. Some desks note that the all the above forecasts seem light based on trading guidance announced at the Goldman Sachs conference. The Street also sees trading revenue up in the high teens and Investment Bank (IB) revenue relatively unchanged. In terms of recent history, JPM have topped estimates for three straight quarters.


• 
  The current analysts rating on the shares is “hold”; with 2 “strong buy”, 6 “buy”, 16 “holds” and 3 “sells”, according to newswires

*WELLS FARGO – 08:00EST/1300GMT

• Analysts see Q4 EPS at USD 1.10 (Prev. USD 1.09 YY), with Revenues at USD 20.1bln (Prev. USD 20.98bln YY). NII is forecast at USD 11.22bln and NIM at 2.54%. Provisions and NCOs are expected to print at USD 771mln and USD 744mln respectively and non-interest income at USD 8.806bln. Mortgage banking income is forecast to come in at around USD 775mln. In terms of recent history, WFC posted mixed earnings with two out of the last three quarters missing street estimates.


• 
  The current analysts rating on the shares is “hold”; with 1 “strong buy”, 3 “buy”, 16 “holds”, 5 “sell” and 3 “strong sell”, according to newswires

*CITI - 08:00EST/ 1300GMT

• The Street expects Q4 EPS at USD 1.87 and Revenues at USD 17.89bln. NII is seen printing at USD 11.76bln with NIM at 2.58%. Provisions are forecast at USD 2.12bln, NCO at USD 2.02vlb and non-interest income at USD 6.33bln. Further, analysts forecast total trading revenues in the high teens and IB revenues unchanged.


• 
  The current analysts rating on the shares is “buy”; with 6 “strong buy”, 17 “buy”, 3 “hold” and 1 “sell”, according to newswires

14 Jan 2020 - 11:08- EquitiesResearch Sheet- Source: Newsquawk