Overview earnings performance for Q4 2024
Strong Q4 2024 Earnings Quarter for Big Banks Earnings
Broader trend of strong performance in the banking sector, fueled by increased deal-making, investment banking activity, and a positive economic outlook. The anticipation of a looser regulatory environment under the new administration and potential Federal Reserve interest rate cuts are expected to further enhance the financial sector’s performance in 2025.
Since bank earnings are a barometer for the earnings season, it does suggest we could see a strong and above-expectations quarter again.
Some common trends among banks:
- Earnings beat expectations, driven mainly net interest income better than expected. It is likely to grow further in 2025 with a positive yield curve.
- Fee income and investment banking showed strong results, supported by a rebound in deal activity after 2023. This should continue with the economic outlook and the new trump administration.
- Consumer spending remains healthy, supporting low credit losses.
- Credit losses in commercial real estate, especially office space, remain a concern.
- Consumer credit card losses were stable in Q4 2024.
- Loan growth is slow but picking up gradually, with cautious expansion by banks and corporations
- Capital rules are expected to be less restrictive, providing a tailwind for the sector.
- Deposits are growing, though competition for them remains intense.
- Banks are building reserves for potential future losses, reflecting a normal cycle amid slowing economic growth and loan growth.