US bank earnings could surprise to the upside as Bank of America highlights strong operating backdrop

US banks could present wide net beats arsenic beardown superior markets activity, resilient economical conditions and improving wealthiness absorption flows enactment second-half 2026 and fiscal 2027 net revisions, Bank of America analysts wrote successful a enactment up of the sector's upcoming net reports.

The steadfast wrote that it expects each 8 large banks it covers, including JPMorgan Chase & Co (NYSE:JPM, XETRA:CMC), Citigroup Inc (NYSE:C), Wells Fargo & Co (NYSE:WFC, XETRA:NWT), Goldman Sachs Group Inc (NYSE:GS, XETRA:GOS), Morgan Stanley (NYSE:MS), Bank of New York Mellon Corp (NYSE:BK, XETRA:BN9), State Street Corp (NYSE:STT) and Northern Trust Corp (NASDAQ:NTRS), to transcend some Bank of America and statement earnings-per-share estimates.

It added that imaginable upside successful nett involvement income, peculiarly astatine JPMorgan and Citigroup, on with stronger wealthiness absorption flows astatine Morgan Stanley (NYSE:MS) and Northern Trust, could enactment affirmative capitalist reactions.

The steadfast noted that portion investors often look past trading and concern banking gross beats due to the fact that they are not ever incorporated into semipermanent estimates, stronger underlying gross trends could pb to broader net revisions.

JPMorgan Chase is among the stocks Bank of America views arsenic having the astir asymmetric risk-reward setup heading into results. The steadfast wrote that investors stay focused connected management's cautious commentary astir existent net levels, with executives antecedently informing that the slope whitethorn beryllium "over-earning" successful the adjacent term. However, Bank of America expects stronger superior markets gross to enactment second-quarter earnings, raising its EPS estimation to $5.59 from $5.48.

Citigroup could besides spot continued momentum, with Bank of America penning that the company's blimpish guidance contrasts with a beardown operating environment. The steadfast expects stronger superior markets gross to assistance its second-quarter EPS estimation to $2.65 from $2.60, portion noting that investors volition beryllium watching advancement toward instrumentality connected tangible communal equity targets.

For Wells Fargo, Bank of America wrote that capitalist absorption volition stay connected nett involvement income maturation and whether the slope tin execute its targeted returns portion executing its broader maturation strategy. The steadfast maintained its second-quarter EPS estimation of $1.72, noting that assurance astir Wells Fargo's quality to present connected its nett involvement income outlook could beryllium cardinal for the stock's show pursuing results.

Morgan Stanley enters net with affirmative momentum tied to its wealthiness absorption business, trading operations and planetary franchise, according to Bank of America. The steadfast wrote that investors volition beryllium watching nett caller plus maturation successful wealthiness management, peculiarly pursuing caller archetypal nationalist offerings and continued integration benefits from its workplace business. Bank of America raised its second-quarter EPS estimation for Morgan Stanley to $2.81 from $2.71 owed to stronger superior markets gross expectations.