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S&P 500 Financials Sector Earnings Preview: Q3 2023


By John Butters  |  October 6, 2023

The Financials sector will be in focus for the market during the next two weeks, as more than 40% of the S&P 500 companies that are scheduled to report earnings for the third quarter over this period are part of this sector. Companies in this sector expected to report earnings during these two weeks include American Express, Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo. The Financials sector is predicted to report the fourth-highest (year-over-year) earnings growth rate of all 11 sectors for Q3 at 8.7%.

At the industry level, three of the five industries in the sector are expected to report year-over-year earnings growth, led by the Insurance industry at 64%. This industry is also expected to be the largest contributor to earnings growth for the sector. If the Insurance industry were excluded, the estimated earnings growth rate for the Financials sector would fall to 2.1% from 8.7%. At the sub-industry level, the Property & Casualty Insurance (113%) and Multi-line Insurance (77%) sub-industries are predicted to report the highest earnings growth rates within this industry. The Reinsurance sub-industry is expected to report a profit in Q3 2023 after reporting a loss in Q3 2022.

The Financial Services industry is projected to report the second-highest (year-over-year) earnings growth rate in this sector at 12%. Both sub-industries in this sector are expected to report double-digit earnings growth: Multi-Sector Holdings (18%) and Transaction & Payment Processing Services (10%).

The Banks industry is predicted to report the third highest (year-over-year) earnings growth rate in the sector at 4%. At the sub-industry level, the Diversified Banks sub-industry is expected to report earnings growth of 7%, while the Regional Banks sub-industry is expected to report a decline in earnings of -15%.

Sean Ryan, VP/Director for the banking and specialty finance sector at FactSet, highlighted a number of key themes and metrics to watch for banks in the S&P 500 during this earnings season:

“Bank earnings kick off on Friday the 13th, which may prove all too appropriate. The primary foci are likely to be 1) the effect of the 76bps Q3 increase in the 10-year Treasury yield on capital levels, and 2) the degree of stabilization in deposits. We would anticipate some deceleration in the flow of demand deposits to money market accounts and CDs, which carries implications not just for banks but for brokers as well. Deposit betas will grind higher, pressuring NIMs, but if the Fed Funds futures market is to be believed then this is more of a lagging indicator at this point. As consumers have largely dissipated the above-trend savings accumulated during COVID, it will be interesting to see whether overdraft fee revenue begins to pick up. Overall loan growth should remain very sluggish, though loan loss provisions should continue rising reflecting both current and prospective credit quality deterioration.

"Among non-interest revenues, mortgage volumes will of course be very weak, reflecting low purchase volume and de minimis refinancing activity. Credit card spend seems to be holding up though credit is worsening, particularly in the private label segment. Investment banking revenues should see a bounce from Q2 levels. Advisory fees will remain depressed but last quarter several managements remained positive on the medium-term outlook; it will be interesting to see whether that persists. Asset management revenues will reflect the market-driven decline in AUM in equities and fixed income, while flows will likely continue to reflect shifts from equity to fixed income, and into alternatives.

"On expenses, while we would anticipate some continued opportunistic hiring, we would also anticipate more draconian cost control programs, since that is among the few levels bank managements can control with much certainty at the moment. Overall, in light of the constellation of negative trends confronting banks, perhaps the most positive thing one might say about the upcoming earnings season is that it may not take much for banks to produce an upside surprise.”

For more commentary and analysis on the banking industry, please see Sean’s articles on the FactSet Insight blog.

On the other hand, the Capital Markets (-7%) and Consumer Finance (-6%) industries are predicted to report (year-over-year) declines in earnings. Within the Capital Markets industry, the Investment Banking & Brokerage (-23%) sub-industry is expected to report a decline in earnings, while the Financial Data & Exchanges (8%) and Asset Management & Custody Banks (7%) sub-industries are both expected to report growth in earnings.

Looking ahead, analysts are predicting earnings growth rates of 5.9%, 3.1%, and 5.8% for Q4 2023, Q1 2024, and Q2 2024, respectively.



This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.


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John Butters

Vice President, Senior Earnings Analyst

Mr. John Butters is Vice President and Senior Earnings Analyst at FactSet. His weekly research report, “Earnings Insight,” provides analysis and commentary on trends in corporate earnings data for the S&P 500 including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, The Financial Times, The New York Times, MarketWatch, and Yahoo! Finance. Mr. Butters has over 15 years of experience in the financial services industry. Prior to FactSet in January 2011, he worked for more than 10 years at Thomson Reuters (Thomson Financial), most recently as Director of U.S. Earnings Research (2007-2010).


The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.