Big banks have been picking up steam with the economy, but the March hiccup in job growth has investors holding their breath about whether the good times are still on.
First-quarter earnings news from Wells Fargo and JPMorgan Chase today will kick off reports by the 18 banks at the core of a financial system still recovering from the 2008 crisis. JPMorgan is expected to make $1.38 a share, up from $1.31 last year. Wells Fargo probably will say it made 88 cents a share compared with 75 cents in the first quarter of 2012, S&P Capital IQ says.
As much as the profits, analysts and economists will watch banks’ loan volumes for clues about whether credit is loose enough to nurture the recovery.
As the nation’s largest mortgage lender by far, Wells’ results will highlight whether home buyers are stepping up and finding the loans they need. And JPMorgan, as a top investment bank, will serve as an early indicator of how bad the early 2013 weakness in investment-banking businesses like merger advisory services actually is.
“You should hear good news,” said Raymond James Financial analyst Anthony Polini.
He expects the biggest banks to post loan growth of close to 10% compared with last year, getting some growth from a better economy while continuing to steal market share from smaller institutions.
In general, banks are doing much better, said Dick Bove, an analyst at Rafferty Capital. They have more capital, loan losses are way down, and loan volume may grow at a double-digit pace