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JPMorgan Chase (NYSE:) & Company, Citigroup Inc (NYSE:)., and Wells Fargo & Company (NYSE:) are set to release their Q3 2023 earnings results on Thursday, October 13. JPMorgan is projected to see a 23% revenue growth and an EPS increase from $3.12 to $3.87. Citigroup expects a 5% revenue growth but a decrease in EPS from $1.63 to $1.19. Wells Fargo anticipates a 7% rise in revenue and an EPS increase from $0.85 to $1.22. Goldman Sachs (NYSE:) and Bank of America (NYSE:) are scheduled to report on October 17.
The upcoming earnings season comes amid three key trends in the credit card industry, which could impact the revenues of these issuers. Goldman Sachs has warned of credit card losses rising at a rate unseen in nearly three decades, excluding the Great Recession, and predicts these to deepen until late 2024 or early 2025.
In contrast, the New York Fed reports total overdue debt balances are surprisingly low, sitting well below pre-pandemic delinquency levels. Nevertheless, tightening credit conditions remain a concern, with the Federal Reserve Bank of St. Louis revealing that 36% of domestic banks tightened credit card loan standards in Q2 2023.
Furthermore, the American Bankers Association’s Q4 2023 Credit Conditions Index anticipates a weakening of credit quality and availability for both consumers and businesses through the end of 2024. Despite this tightening, credit card acquisitions remain high, approaching a yearly peak as per VantageScore.
Additionally, The Conference Board’s Expectations Index signals a decline in consumer sentiment which could steer consumers to shift to less risky debit cards from credit cards, a trend already noted by Bank of America. This shift could potentially curtail credit card volume growth and impact issuers’ revenues if credit cards’ share of spending declines.
Despite positive indicators like a stronger-than-expected jobs report and cooling inflation, these concerns persist. The earnings coverage of these credit card issuers will be keenly observed as they navigate these challenges in the coming quarters.
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