Bank earnings expectations: ‘You can’t go from great to great to great’
- ANTH.PVT
- JPM
Hennessy Funds Portfolio Manager David Ellison talks with Market Domination’s Brooke DiPalma about what to expect from Q3 earnings season results from banks and why cyber risks could be mentioned on earnings calls.
David, thanks so much for being with us because it seems like expectations going in, you’re seeing or you’re expecting for about 10 to 15% year-over-year earnings per share growth. That’s up against though an environment where loans are up around 8%, deposits up 5. 5 to 6% rather. So what exactly is expected to go right within this quarter? What can we hear that will lead to those sort of results?
Well, I think a lot of things went right last quarter. So to have them all go right again is, you know, it’s but I I think, you know, credit will be fine. I think margins could be under pressure a little bit and we’ve talked about, you know, a lot of people talked about the rate increases. I think the Wall Street income as we look at it collectively will be good, but maybe the guidance will be a little lighter just because you you you went from good to great. You can’t go from great to great to great. So it’s at some level it’s got it can’t just keep going up forever. So
Right. But the industry’s in good shape.
We heard Jamie Diamond at a conference the other day saying that Anthropic’s Mythos AI raised cybersecurity risk by 10-fold. He was citing the models uh lifted safeguards, unauthorized actions during testing, and that hugging face incident we heard not too long ago. So, could we expect to hear anything from these bank executives on the call about cyber risk for the company, how they’re managing them?
Well, the good news is that they’re talking about it and they’re afraid of it.
Okay.
Which means they’re planning, they’re not saying it doesn’t matter, don’t worry, right? They said that about subprime. Remember it was ring fenced, don’t worry and then it blew up. They’re not doing it this time. So I think that, you know, Jamie Diamond has enough of a cache in the industry obviously that people say, well, if he’s worried about it, I should be worried about it. And so I think the whole industry is worried, which means they’re paying attention to it and frankly in banking, when you pay attention to something, it doesn’t go wrong. It’s what you don’t pay attention to that gets in trouble.
