Do Not Bank On The Investment Banking Sector (C, JPM, GS, BAC, CS)

At a time when the pressure to separate retail and investment banking is growing, the investment banking sector is facing a disaster, with top-notch investment banks likely to post devastating results for Q4. Some of the investment banks that are expected to report grim earnings are Bank of America (NYSE: BAC), Citigroup (NYSE: C), JPMorgan (NYSE: JPM) and Goldman Sachs (NYSE: GS).

Analysts at Morgan Stanley expect earnings at C, JPM, GS and BAC to nosedive, estimating the fall to be between 22% and 41%. The sector, which generates revenues from trading commodities, fixed income and currencies, may deliver a decent performance only in commodities. Of these financial firms, JPM is the first to report earnings tomorrow and has projected a decline of 27% in fixed income revenues across the big financial companies. JPM expects fixed-income divisions at Credit Suisse (NYSE: CS), GS and BNP Paribas to plunge 30% in the quarter.

While BAC’s share price has risen by 1.50% to $16.87, that of C has inched up 0.43% to $3.52. GS’ shares remained almost flat, rising merely 0.58% to $150.08.