· Event impact
Five Major U.S. Banks to Report Q2 Earnings; NII and Credit Provisions in Focus
Transmission path
Net interest margin expansion via higher asset yields vs lagging deposit costs.
Market mechanism
Net interest margin expansion via higher asset yields vs lagging deposit costs.
Extended read
As the Federal Reserve maintains a hawkish stance, the 'Big Five' banks are under scrutiny for their ability to sustain net interest income. While higher rates generally support margins, the focus is shifting toward the cost of maintaining deposits and the necessity of increasing credit-loss reserves as a hedge against potential economic softening. JPMorgan and Citigroup are specifically highlighted for strong expected EPS growth, driven by a rebound in capital markets activity and aggressive share buyback programs. Investors will look for confirmation that investment banking fees are offsetting any normalization in consumer lending.
Exposed assets
JPM
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