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Major Banks Poised for Strong Quarterly Results, Outlook, Deutsche Bank Says

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Major Banks Poised for Strong Quarterly Results, Outlook, Deutsche Bank Says

US large-cap banks are expected to report strong second-quarter earnings and issue upbeat guidance, with Huntington Bancshares (HBAN), US Bancorp (USB), and Wells Fargo (WFC) seen as top picks, Deutsche Bank said Monday.

The brokerage's per-share earnings estimates for major banks are 2% above Wall Street's views on average, as others likely have not factored in the intra-quarter guidance updates from lenders. Deutsche Bank said it's "most above consensus" on Citigroup (C) and JPMorgan Chase (JPM).

"Several banks tweaked up their quarterly (net interest income) expectations in early June (driven by strong loan growth) and pointed to better-than-expected investment banking and trading/markets (revenue)," Deutsche Bank analyst Matt O'Connor said in a note to clients.

Bank earnings are scheduled to kick off July 14, with JPMorgan, Bank of America (BAC), Citigroup, Goldman Sachs (GS), and Wells Fargo slated to report.

Huntington trends likely stabilized in the June quarter, with results seen improving in the second half of the year, according to Deutsche Bank.

"We believe key issues seem to be resolving, including questions surrounding loan growth, liquidity, and deal risk," O'Connor said. "(Huntington) shares trade at the lowest multiple among our coverage despite a solid long-term track record of both deal integrations and organic growth."

US Bancorp is experiencing improved execution under Chief Executive Gunjan Kedia and an upward bias to its full-year revenue outlook following consecutive strong quarterly performances. The lender's recently completed the acquisition of financial services firm BTIG is well-timed due to broad strength in equity trading, while the bank's payments division is also positioned to benefit from strong retail sales volumes, O'Connor said.

Wells Fargo shares have lagged its peers so far this year following a couple of disappointing quarters regarding both financial results and outlook, Deutsche Bank said. However, first-quarter trends were better than initially perceived.

"Momentum has also been building more than the market appreciates in our view post the lifting of the asset cap in June of 2025 and we expect this to be more evident in (second quarter)/beyond," O'Connor wrote.

Deutsche Bank's higher EPS outlook for Citigroup factors in a revenue boost from the recent transfer of American Airlines (AAL) card receivables from Barclays (BCS), according to the note.

Price: $17.74, Change: $-0.05, Percent Change: -0.28%

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