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JPMorgan Chase & Co. (JPM), Goldman Sachs Group, Inc. (GS): Can Sluggish Lending Sink These Banking Giants?

However, seasonally higher compensation expenses could hike the bank’s operating expenses to $18 billion from the prior quarter’s $16.1 billion figure. Since this is a seasonal hike in expenses, it should not cause concern.

Credit quality at Bank of America Corp (NYSE:BAC) should also see improvement driven by a 15% sequential decrease in the provision expenses and a 16% sequential decrease in the net charge-offs.

U.S. Bancorp (NYSE:USB)

U.S. Bancorp (NYSE:USB) is expected to disclose its first quarter performance today. Analysts have a bottom line estimate of $0.73 per share for the bank. Revenues for the first quarter are expected to come in at $5.1 billion, which is above the prior quarter’s and previous year’s results.

The bank experienced sluggish growth in loans while it also experienced pressure on its net interest margin. Apart from that, you will see healthy trends in the operating fee income, which should advance 4% over the linked quarter on higher merchant and ATM processing and treasury management fees. However, revenues accruing from mortgage banking will plunge due to a 5% decline in mortgage originations.

Besides, non-performing assets should plunge 6% over the prior quarter, while another 3% decline in the net charge-offs is expected.

Conclusion

Large banks are faced with regulatory headwinds aimed at making them safer. However, these regulations will hamper their lending abilities. Therefore, you can expect sluggish loan growth and the resultant pressure on the top line in the coming quarters. Banks with better expense management in place will be best positioned to outmaneuver the challenging times. Therefore, I recommend you invest in US Bancorp and Bank of America Corp (NYSE:BAC).

The article Can Sluggish Lending Sink These Banking Giants? originally appeared on Fool.com and is written by Adnan Khan.

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