Welcome back to a big week for U.S. banks. Starting tomorrow, JPMorgan and Citi, followed by Goldman Sachs and Bank of America on Wednesday, followed by Morgan Stanley on Thursday, report their fourth quarter and full year results for 2019. Shortly after that, bonus numbers for employees will be announced.
There is reason to think that results, at least, will be good. But reason, too, to not take the strong performance at face value.
In a note released last week, analysts at KBW predicted that fixed income trading revenues will be up a massive 35% year-on-year at the median bank in the fourth quarter. They expect median debt capital markets (DCM) revenues to be up a more modest 6%, equity capital markets (ECM) revenues to be up 5%, equities sales and trading revenues to be up 2%, and M&A advisory revenues to be down 16%.
Taken at face value, it looks therefore like banks should have ended last year on a strong note, driven by revenues in their large fixed income sales and trading businesses. The Financial Times cites a Bloomberg poll of analysts which predicts an overall 12% rise in fourth quarter net income year-on-year at JPMorgan, a 13% rise at Goldman Sachs, and a rise of 37% at Morgan Stanley.