With an earnings deluge over the last week, the financial services sector has been giving the markets mixed signals: Profits are beating estimates, but revenue growth is still sluggish. Margins are ever-crimped by low interest rates, but consumers have been taking advantage of low rates to refinance and deleverage.
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For Bank of America, it could be the quarter of reckoning. The nation's second-biggest lender saw its earnings the last two quarters nearly wiped out by hefty legal settlements that weren't covered by already-steep litigation reserves. (Click here to get the latest quotes on Bank of America)
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Analysts polled by FactSet estimate the Charlotte-based bank will earn $0.22 per share on $23.24 billion in revenues in a quarter where a surprise boost to investment banking activity will outshine a slowdown in mortgage origination. Add to Bank of America's bottom line that it has been aggressively pursuing $8 billion in cost cuts, with thousands of layoffs.
Jeff Harte, analyst at Sandler O'Neill, points to one business line where cost-cutting progress is paramount.
"The big thing for Bank of America is how quickly they can get the mortgage servicing portfolio down," Harte says. "That's where a lot of the expenses come into play."
For American Express, the top US credit-card issuer by purchases, analysts expect $1.12 per share on just over $8 billion in revenues. (Click here to get the latest quotes on American Express)
The company will take a $400 million charge stemming from restructuring announced early in the quarter. The restructuring will cut 4,500 jobs, or 8.5 percent of the company's workforce. The bulk of the cuts target the travel services unit, which is struggling to compete with the likes of internet bookings offered by the likes of Priceline and Expedia.
Still, trends in consumer credit point to an improving profile for card issuers and lenders like AmEx: Net charge-offs continue to fall, while delinquencies have fallen to an 18-year-low.
Adding a further boost to shares in the quarter, for both Bank of America and American Express: share buybacks, announced following the results of the Federal Reserve's stress tests.
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—By CNBC's Kayla Tausche; Follow her on Twitter: