Trading activity for fixed income, currencies and commodities could be flat or slightly higher due to interest rate hedging and foreign-exchange volatility. Fixed-income activity may also experienced a slight boost due trading based on Bill Gross’ switch to Janus.
Observers anticipate banks will continue to experience improved loan growth, albeit slightly lower due to a seasonally slower summer.
Investors have to watch for rising expenses as well. Regulatory and compliance-related expenses could rise in response to Federal Reserve stress tests. Some banks have also been saddled with greater expenses due to lawsuit payouts.
Meanwhile, the credit quality for bank customers have improved. The percentage of loans deemed uncollectable by banks are expected to keep dropping.
Lastly, advisory and equity underwriting revenue is projected to expand, though debt capital markets could slow for investment bankers. Nomura warns that debt capital markets slowdown is expected to weigh on Citigroup, J.P. Morgan and Bank of America (NYSE: BAC). [Bank ETFs Wait on Higher Rates]
For information on the financials sector, visit our financial category.
Max Chen contributed to this article.