J.P. Morgan sees mixed Q3 for large banks, M&A to drive growth

Pioneer Credit

08/10/2021 11:51

** J.P. Morgan expects mixed Q3 earnings for large-cap U.S.
lenders and sees record-high M&A activity as the key medium-term
revenue driver for some banks
    ** "We expect Q3 earnings to be marked by strong
markets-related activity, offsetting continued weak loan growth
and pressure on net interest margins" - JPM analysts
    ** Says M&As hit $1.6 trillion in Q3, highest since 1995,
citing Dealogic data 
    ** Brokerage raises PTs on all major banks, with eventual
Federal Reserve rate increases set to support returns from
lending activity
    ** "Medium term, we continue to recommend bank stocks due to
the backdrop of higher rates" - JPM
    ** Says rate increases are unlikely until late 2022 or 2023;
adds that benefits from higher rates will likely show up more in
Q4 
    ** The S&P 500 Banking Index  .SPXBK  is up 37.63%
year-to-date
    ** Major bank stocks, which have benefited in recent
sessions from a spike in Treasury yields, edge up in premarket
trade 

 (Reporting by Anisha Sircar)
 ((anisha.sircar@thomsonreuters.com))