Three Key Trends to Watch as Major Banks Report Earnings

As the fourth-quarter and full-year 2023 earnings season kicks into high gear, investors are eagerly awaiting reports from some of the world's largest financial institutions. JPMorgan Chase, Goldman Sachs, Wells Fargo, BlackRock, Citigroup, and Charles Schwab are among the companies set to release their results, providing valuable insights into the health of the global economy and the financial sector. Here are three key trends to watch as these major banks report their earnings:

1. Regulatory Impact on Capital Requirements and Profitability

The Basel III international banking standards, implemented since 2012, are set to reach their final portion, the endgame, in July 2025. Some proposed increases to regulations, such as capital requirements, were "softened" in late 2024 and lowered from their initial announcements. This means that banks may face less stringent capital requirements than previously anticipated, which could positively impact their profitability.

Keefe Bruyette, an investment bank and brokerage firm, anticipates that banks will receive a boost as the Basel III Endgame capital requirements "will be meaningfully watered down." This suggests that banks may have more flexibility in managing their capital and could potentially increase their profitability as a result. Additionally, Truist and BofA, two other financial institutions, wrote in research notes that earnings growth for banks and financial stocks is set to reaccelerate this year with an improving regulatory backdrop. This further supports the notion that regulatory changes could have a positive impact on banks' capital requirements and profitability.

As major banks report their earnings, investors should pay close attention to the impact of regulatory changes on their capital requirements and profitability. The earnings reports from JPMorgan Chase, Goldman Sachs, and other banks will provide more insights into the specific impact of these regulatory changes on their financial performance.

2. Strategic Acquisitions and Expansion into Private Markets

BlackRock, the world's largest money manager, has been actively expanding its presence in the private markets through strategic acquisitions. In 2024, BlackRock acquired Preqin, a large London-based provider of data on the private markets, for $3.2 billion. The firm also acquired Global Infrastructure Partners (GIP) in October for $12.5 billion and announced a deal to buy HPS Investment Partners in December, valued at $12 billion.

These acquisitions are expected to increase BlackRock's assets under management (AUM), diversify its revenue streams, and potentially lead to higher returns. By expanding into private markets, BlackRock is positioning itself to compete more effectively in these markets and capitalize on the higher potential returns they often offer.



As BlackRock reports its earnings, investors should watch for updates on its recent acquisitions and the impact they have had on the company's AUM, revenue, and profitability. The earnings report will also provide insights into BlackRock's plans for further expansion into private markets and the potential benefits these acquisitions may bring to the company's growth prospects.

3. Earnings Growth Trajectory and Outlook for 2025

Banks' earnings growth is expected to reaccelerate in 2025, driven by an improving regulatory backdrop and the recent pullback in bank stocks, which provides an opportunity to selectively add exposure. However, it is important to note that the Nasdaq and S&P 500 have pulled back below their 50-day moving averages, and IBD currently recommends remaining cautious with 20% to 40% stock market exposure.

As major banks report their earnings, investors should pay close attention to their earnings growth trajectories and outlooks for 2025. The earnings reports from JPMorgan Chase, Goldman Sachs, and other banks will provide valuable insights into the health of the global economy and the financial sector, as well as the potential for earnings growth in the coming years.



In conclusion, as major banks report their earnings, investors should watch for updates on the impact of regulatory changes on capital requirements and profitability, the strategic acquisitions and expansion into private markets, and the earnings growth trajectories and outlooks for 2025. These trends will provide valuable insights into the health of the global economy and the financial sector, as well as the potential for growth and investment opportunities in the coming years.