Key Takeaways
- • KBW CEO Tom Michaud, appearing on CNBC's "Squawk on the Street," said he expects bank stocks to remain under pressure until the interest rate outlook settles.
- • A preview of the US bank reporting season projects third-quarter earnings for the largest banks rising up to 20% from a year earlier, driven by investment banking and trading revenue.
- • Investor focus is on the effects of higher rates and the pace of bank deal activity, with Michaud's comments on how interest rate dynamics will shape near-term bank performance.
Summary
KBW CEO Tom Michaud joined CNBC's "Squawk on the Street" to discuss the outlook for third-quarter bank earnings. According to the interview summary, Michaud expects banks to remain under pressure until the rate outlook becomes clearer, with the trajectory of interest rates and their effect on net interest income central to his view of the sector's near-term performance.
Market previews for the reporting season point to a stronger earnings picture for the largest institutions. One preview, headlined "US bank investors to focus on impact of higher rates, deals," projects third-quarter earnings for the largest banks rising up to 20% from last year. The gains are expected to come mainly from investment banking and trading revenue, while investors weigh how higher rates and merger and acquisition activity will affect results.
Michaud, president and CEO of Keefe, Bruyette & Woods, an investment bank focused on financial services, has been a regular commentator on the sector. The Q3 discussion reflects a more cautious tone than some of his earlier remarks on the industry's profitability, with the rate backdrop remaining the key variable for banks and the investors who hold their shares.
Market previews for the reporting season point to a stronger earnings picture for the largest institutions. One preview, headlined "US bank investors to focus on impact of higher rates, deals," projects third-quarter earnings for the largest banks rising up to 20% from last year. The gains are expected to come mainly from investment banking and trading revenue, while investors weigh how higher rates and merger and acquisition activity will affect results.
Michaud, president and CEO of Keefe, Bruyette & Woods, an investment bank focused on financial services, has been a regular commentator on the sector. The Q3 discussion reflects a more cautious tone than some of his earlier remarks on the industry's profitability, with the rate backdrop remaining the key variable for banks and the investors who hold their shares.
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