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Big banks report earnings this week

Yahoo Finance’s Alexis Christoforous, Brian Cheung and Kristin Myers discuss what do expect as big banks report earnings this week.

Video transcript

ALEXIS CHRISTOFOROUS: I want to switch gears quick here because earnings season is going to kick into high gear this week with the big banks. And I know that they're a group where we saw a sharp rise in estimates for their earnings. So what are the expectations there?

BRIAN CHEUNG: Yeah, well, time flies, and we're at another earnings season with Wednesday set to kick off the season with JPMorgan Chase, Goldman Sachs, Wells Fargo. Thursday, we're going to get Bank of America and Citigroup and then Morgan Stanley on Friday. And the expectation is for the banks to show kind of tepid loan growth. That's because a lot of the stimulus payments from the last few rounds of the fiscal stimulus have led to a lot of loan paydown. So it's not a lot of people taking on new debt.

But earnings guidance from these companies are going to be very interesting to see whether or not there should be some expected windfall in a increase in loan growth in the future. You've heard from Deutsche Bank's Matt O'Connor in a note earlier last week, saying that there could be another 30% to 50% upside in bank stocks over the next two to three years if earnings per share do, indeed, rise by 15% to 20% in 2023 and 2024 each. If that is the case, Matt O'Connor, again, at Deutsche, saying, bank stocks could actually be still discounted despite the pretty significant run-up that we've seen since the winter last year. So very interesting to watch as those earnings do kick off this week.

ALEXIS CHRISTOFOROUS: And we know they're going to be market moving, as they always are. All right, Brian Cheung, thanks so much.