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Big Financials Will Keep Losing Money: Experts

Monday, 12 Oct 2009 | 11:43 AM ET

Large financial companies face a busy week of earnings. So what kind of results should investors be expecting? Christopher Whalen, senior vice president and managing director at Institutional Risk Analytics, and Paul Miller, group head of financial services at FBR Capital Markets, shared their insights.

Financials Earnings Parade
A preview of what to expect from earnings season, with Chris Whalen, Institutional Risk Analytics; Paul Miller, FBR Capital Markets; and CNBC's David Faber.

“What people are going to be looking for is early-stage delinquencies and non-reforming assets,” Miller told CNBC.

“People want to see early stages of delinquencies and if we’re going to see stabilizations on the credit front…Most companies will lose money this quarter including some of these big guys.”

CNBC Data Pages:

Whalen said credit is going to be a large factor.

“I don’t expect to see the charge-offs climbing the way it has been earlier this year but it’s going to climb,” he said.

“And my worry is that the third quarter is going to look relatively good…but overall, the industry is still losing money and we still see the effect of subsidies in the top six names."

Whalen said revenue and the other factors that enhance earnings numbers may not be sustained as banks head into 2010.

More Market Intelligence:

“Most companies [excluding JPMorgan] have been putting a smiley face on, in part, because they haven’t had to 'fess up to certain future issues like off-balance sheet exposures,” he said.

“But Bank of America and Wells Fargo have trillions of dollars worth of off-balance sheet vehicles.”

COUNTERPOINT:

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CNBC Slideshows:

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Big Financials Reporting Earnings This Week:

JPMorgan

Goldman Sachs

Citigroup

Bank of America

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Disclosure:

Miller does not own any shares of Bank of America.

No immediate information was available for Whalen or his firm.

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Disclaimer

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