More than $1 billion has been wiped off earnings estimates for Wall Street's five biggest banks in the past month on growing fears of a sharp decline in trading revenues coupled with increased legal costs.
JPMorgan Chase has borne the brunt of forecast cuts, with consensus estimates of net income down $526 million to just under $5 billion. Its growing legal bills alone are expected to add $2 billion in costs when it kicks off the banks' earnings season on October 11.
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But the depressed forecasts have extended to all banks with big fixed income trading operations, after several warnings of slow activity throughout the last three months. Hopes of a final trading flurry in the last few weeks of the quarter have been dashed, with fixed income trading revenues particularly hurt.