Seeking Alpha: Big Banks Winners And Losers In Q1

With the first quarter in the books and reporting about to start, it seems like a good time to consider what could be in store for some of the country's largest banks. Bank of America (BAC) and JPMorgan (JPM) will be among the first major banks to report, and their results and guidance will no doubt set the tone for this sector.

General Thoughts

On the positive side, the banking sector most likely saw ongoing improvements in credit and investors should expect lower provisions. That will mean that reserve releases will once again play a large role in the extent to which banks outperform published estimates, and while they may lead some commentators to carp about earnings quality, it is nevertheless better than the alternative.

Credit and debt markets have been strong, and that would seem to be a positive for those banks with larger holdings of securities as a percentage of earnings assets. On the above-average side sit JPMorgan, Citigroup (C), and Bank of America (all of which are also very active in trading), while U.S. Bancorp (USB), BB&T (BBT), and Wells Fargo (WFC) have relatively less exposure.

That said, the outlook for trading revenue does not look so strong and overall investment banking revenues could be a little iffy, as weak equity underwriting may limit upside to the healthy M&A market. That is not a major factor for U.S. Bancorp, BB&T, or PNC (PNC), but will be more significant for JPMorgan, Citi, and Bank of America.

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Big Banks Winners and Losers in Q1