CNBC Stock Blog

Big Financials Will Keep Losing Money: Experts


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

“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.”

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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.

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“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.”


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Big Financials Reporting Earnings This Week:


Goldman Sachs


Bank of America


Miller does not own any shares of Bank of America.

No immediate information was available for Whalen or his firm.