• By The Financial District


As big U.S. commercial banks close their books on the third quarter, analysts expect them to report a 30% to 60% plunge in profits on the year-ago period due to the pandemic-induced recession and near record low interest rates, David Henry reported for Reuters.

That slump in third quarter net income comes even though lenders are not going to make outsized provisions for expected loan losses as they did in the first and second quarters.

And, while capital markets and investment banking revenue is expected to be up from 5% to 20%, that won’t be enough to make up for the decline in interest income from loans and securities. “You have soft loan growth and you’re still feeling the impact from aggressive Fed actions earlier this year,” said analyst Jason Goldberg of Barclays.

Citigroup Inc. and Wells Fargo & Co., the third- and fourth-biggest U.S. banks by assets respectively, will report net income down by about 60%, according to I data from Refinitiv. JPMorgan Chase & Co. and Bank of America Corp., which rank first and second in assets respectively, are expected to show profits down about 30%. Investment banks Goldman Sachs Group Inc. and Morgan Stanley, which are benefitting from being more concentrated in the busy capital markets, are expected to report more modest profit declines of about 5% to 10%.

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