Fitch Ratings-New York-22 July 2022: Large U.S. banks reporting 2Q22 earnings thus far have been consistent with underlying macroeconomic cross currents that reflect tailwinds for net interest income (NII) and headwinds for non-interest income, most notably capital markets and mortgage banking revenue, Fitch Ratings says.

Net revenues were mixed relative to very strong 2Q21 results. For the quarter, banks with significant capital markets businesses saw a larger revenue deceleration or outright declines relative to banks with higher NII concentration. Investment banking fees fell around 50% YoY as low macroeconomic visibility prevented transactions from closing. Market volatility provided favorable conditions for trading revenues, which were generally up on a year-over year basis depending on mix, although trading revenues declined sequentially.

Similar to 1Q22, earnings generally declined for the largest U.S. banks YoY, as 2021 earnings were buoyed by reserve releases and abnormally high fees from investment banking and asset/wealth management. By contrast, loan growth and net interest margins (NIM) have become revenue tailwinds for banks, while banks with more exposure to capital markets and investment banking experienced sharper declines in earnings in 2Q22.

To continue reading the rest of the article, please click on the source link below:

https://www.fitchratings.com/research/banks/us-bank-2q22-earnings-decline-as-macroeconomic-uncertainty-persists-22-07-2022