US bank investors to focus on impact of higher rates, deals outlook in Q3 earnings

US bank investors will closely examine quarterly earnings next week for indications that recent surges in Treasury yields might impact dealmaking, lending, and funding costs. Analysts anticipate a 20% increase in third-quarter earnings for major banks, with heightened investment banking and trading revenue, and a stable credit portfolio.

However, bank stocks have suffered due to bond yields reaching record highs. The KBW Bank Index fell 13% from its August peak and 6% in the third quarter. Four of the six largest US lenders—JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo—are scheduled to report on October 13, while Morgan Stanley and Bank of America will release earnings on October 14.

Higher interest rates have slowed capital markets activity, prompting investors to consider potential effects on deposit costs and credit quality. Investment banking deals may face uncertainty as bond yields continue to rise, and analysts will scrutinize banks' guidance on this front and their ability to manage costs.