This Friday, large bank stocks will be the first to release their Q3 financial results. As usual, the disclosure of bank stock performance often signals the official start of a new round of financial reporting season.

Among them,$JPMorgan (JPM.US)$,$Bank of New York Mellon (BK.US)$,$Wells Fargo & Co (WFC.US)$Will be the first to announce financial results before the market opens on Friday; followed by the results announcement on next Tuesday (October 15th).$Bank of America (BAC.US)$,$Goldman Sachs (GS.US)$,$Citigroup (C.US)$Finally,$Morgan Stanley (MS.US)$,$U.S. Bancorp (USB.US)$Financial reports will also be gradually disclosed next Wednesday (October 16).

Overall, the stock prices of large banks performed well in the third quarter, with jpmorgan, bank of new york mellon, morgan stanley, u.s. bancorp, and others hitting historical highs in this range, with the expectation of rate cuts driving the development of the banking industry.

According to Sean Ryan, Vice President of Banking and Specialty Finance at FactSet, several key themes and indicators need to be noted in this banking earnings season.

With the start of the Fed's easing cycle, the banking industry will ease or even reverse some negative trends, which will help improve the quality of earnings in the next few quarters.

• During the rate-cutting cycle, the net interest margin of the banking industry will be affected, focusing on the positive effects on performance in 2025.

Looking at the short end of the yield curve of the 2-10 year U.S. Treasury bonds, with the September fed funds rate cut, the curve has reflected a significant previous easing pattern, and the long-awaited easing cycle has finally begun.

富国银行表示，在经济软着陆与预期降息的情况下，银行股有望反弹，且跑赢基准指数。该行分析称，以史为鉴，在没有出现经济衰退情况下的降息对银行股向来是有利的。比如，1995年、1998年、2019年，降息都刺激了美股银行股上升。在经济软着陆背景下，美股银行股在首次降息后的季度涨幅，会超出标普500指数近10%。

According to Wells Fargo & Co, the investment window for the rebound in bank stocks is mainly concentrated in the first quarter after the first interest rate cut. In 7 out of the past 8 interest rate cut cycles, bank stocks have lagged behind the S&P 500 index in performance from 3 to 12 months after the first interest rate cut. Therefore, the bank's analyst team emphasizes that investors need to act quickly in order to seize the profit opportunities in the early stages of the interest rate cut. However, the bank also warns that if the interest rate cut is accompanied by a recession, the prospects for bank stocks will not be optimistic.

It is worth noting that although the Fed's easing measures are not the decisive factor for third-quarter performance, they may impact short-term net interest rate expectations due to their direct impact on asset-sensitive balance sheets, exceeding the scope of long-term benefits. This is just one of the few short-term adverse factors that the market may overlook, while the market is currently focusing primarily on the potential positive effects of the 2025 performance.

• Banks' third-quarter performance is expected to be mixed, with a focus on net interest income, non-interest income, and credit.

Net interest income may once again be constrained by slow loan growth, and the ongoing process of hitting bottom in the net interest margin may pause. In terms of non-interest income, investment bank revenue will be constrained, mortgage banking revenue may remain weak, but wealth and asset management performance benefit from the S&P 500 index rising this quarter.MergerIn terms of credit, the market may anticipate better news for 2025, with commercial real estate and credit cards becoming the main drivers of provisions, but the start of the easing cycle alleviates the pressure on commercial real estate refinancing. Overall, the third-quarter banking performance is mixed, but the market is also looking forward to potentially more positive conditions in 2025.

In addition, investors can also focus on regional bank stocks, which may rise due to Fed rate cuts, as rate cuts will provide much-needed relief to regional banks that were previously struggling.

此外，投资者还可以关注区域银行股可能会因美联储降息补涨，因为降息会给此前陷入困境的地区银行提供急需的压力缓解。

Market analysis generally points out that after two years of tightening policies, the Federal Reserve's monetary policy is expected to shift towards easing, which is expected to significantly alleviate the operational pressure of bank of america, especially some regional banks; for a long time, these banks have been trying to overcome the adverse effects of the high interest rate environment on their profits and borrowers. With the enhanced expectations of rate cuts, regional banks are expected to reduce their funding costs, as the decrease in deposit interest for depositors will directly increase the bank's profit margin.

In addition to rate cuts, attention should be paid to long-term regulatory policy changes.

Wall Street market analysis also believes that at present, the expected impact of interest rate cuts on bank earnings is currently showing a "mixed bag" situation. In addition, investors should also pay attention to the new asset management regulations in the banking industry.

According to Bloomberg, informed sources said that after regulatory agencies agreed to comprehensively revise the proposed package of regulations, the capital surcharge requirements facing large U.S. banks will be reduced to 9%, a big discount compared to the original plan.

In July last year, according to the new banking regulatory proposal issued by the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), banks with assets exceeding $100 billion must increase their capital by approximately 16%; among them, eight U.S. banks of global systemic importance including JPMorgan, Bank of America, Citigroup, Wells Fargo & Co, Goldman Sachs, and Morgan Stanley are required to increase their capital by 19% to cushion against unexpected losses and financial shocks.

Bloomberg reported that the substantial reduction in capital requirements is more likely to appease banks. After the proposal was issued in July last year, the banking industry launched historically intense lobbying efforts. In addition, the revised new plan may also help Federal Reserve Chairman Jerome Powell achieve the goal of obtaining broad internal support from the Federal Reserve. Powell has previously made it clear to banks that he also hopes to avoid a lengthy legal battle, and the final approval may not be until the end of next year.

In addition, the following two banking industry indices are also worth investors' attention: one is$Spdr S&P Bank Etf (KBE.US)$The index is composed of approximately 66% regional banks, with the rest made up of large banks and other financial institutions; secondly,$Spdr Series Trust S&P Regional Bkg Etf (KRE.US)$the fund only includes a basket of small and medium-sized banks in its components.

Editor/ping