2020 was a whiplash year for US banks. When companies start reporting their fourth quarter earnings this week, investors will want to know if they should expect something else.
The spring and summer of 2020, when the coronavirus pandemic first began to devastate the US economy, seemed bad for banks. Profit plummeted as they set aside money for bad debts. So was their stock price. But by the fall, things had improved. Strong mortgage demand, healthy trade income, and an economy that continued to rise and fall with generous government stimuli helped isolate banks from the worst-case scenarios.
What is not clear right now is how long those boosters can last.
“The fourth quarter will be a nuisance,” said KBW analyst Brian Clock. “But the real focus will be on what 2021 will look like.”
Bank earnings: Expect messy quarters and peaks in 2021
Source link Bank earnings: Expect messy quarters and peaks in 2021