Fourth Quarter Not Looking Good

by Beth Connolly

Stories today follow yesterday’s reports of lackluster expectations for forthcoming fourth quarter reports.

JP Morgan Chase will be the first big bank to announce earnings on Friday.  The Street comments at Forbes,

Consensus expects the nation’s biggest bank by assets to report earnings per share of 93 cents on revenue of $23.47 billion. That is down from earnings per share of $1.02 on revenues of $24.36 billion in the previous quarter and is lower still from a profit of $1.13 per share on revenue of $26.7 billion recorded in the fourth quarter of 2010.

Goldman Sachs and Morgan Stanley are expected to present equally unimpressive results. Sanford Bernstein’s Brad Hintz on Friday cut his earnings estimates for Goldman Sachs from $3.15 a share to 77 cents a share and its estimates for Morgan Stanley  from a loss of 19 cents a share to a loss of 75 cents a share, reports Fortune.

In another article, the Street notes that earnings at a variety of banks took a hit in the past quarter due to one-time charges, like the $400 million layoff program at Citi and Morgan Stanley’s $1.8 billion pretax loss due to a legal settlement.

Other causes of reduced fourth-quarter earnings? The European debt crisis and U.S. regulatory uncertainty.  “We do not anticipate a robust capital markets recovery in 2012. We believe the threat emanating from Europe will dominate customer activity, and we see little hope of any resolution in the first half of the year,” said Hintz in the memo.  Barclay’s and JP Morgan also lowered price targets for Goldman and Morgan Stanley.

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