U.S. Large Banks Lose $270 Billion in Market Value, Q3 Earnings in Focus

The market capitalization of five major U.S. banks has decreased by approximately $270 billion compared to the summer peak. With concerns that rising interest rates may dampen the profitability of investment banking and trading operations, this week's upcoming Q3 earnings reports are being closely watched as a potential turning point for the banking sector. JPMorgan Chase, Goldman Sachs, and Citigroup are set to announce their earnings on the 13th, while Bank of America and Morgan Stanley will do so on the 14th. Analysts expect these banks' net profits to decline compared to the previous quarter. The combined market capitalization of the five major U.S. banks has dropped by about $270 billion from the summer peak to the closing price on the 9th. UBS analysts pointed out that the sharp rise in long-term interest rates is a major cause of the underperformance of bank stocks. According to a recent survey, only 35% of institutional investors expected bank stocks to outperform the overall market. While rising interest rates can initially increase interest income from loans, the increase in deposit rates and funding costs can burden profitability. Trading revenues are expected to be the first to be confirmed in the Q3 results, with a decrease in trading activity in the fixed income sector anticipated. Large-scale funding for building AI infrastructure could provide new revenue opportunities for investment banks.

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