Large banks’ earnings ‘much better than expected’, says RBC Capital

RBC Capital analyst Gerard Cassidy writes that the quarterly earnings of four major banks reporting results last week – JPMorgan (JPM), Citi (C), Wells Fargo (WFC), and PNC (PNC) – were "much better than expected". The results showed higher net interest margins which were driven by sticker-than-expected deposits and a greater percentage of higher yielding earning assets, even though investment banking results remained "very weak" and loan loss reserves were increased in anticipation of a weaker economy, the analyst tells investors in a research note. Looking ahead, RBC expects modest loan growth and elevated net interest margins to support net interest income growth in 2023.