In the next few weeks the six biggest banks in the United States will be releasing their financial reports for the third quarter of the year.Analysts expect profit from four out of six banks which include the two best run banks Goldman Sachs and JPMorgan Chase.Wall Street on the other hand expects losses from Wells Fargo, Morgan Stanley and Washington’s biggest beneficiaries Citi Group and Bank of America.According to the bank analysts, and due to the economic turndown, banks are still recovering from their losses which may cause inaccurate profit reports at bigger banks and failure at smaller ones.The stocks of all majour banks reportedly went up in the third quarter which is a good sign of recovery.
CONNECTION
In the past two chapters we were introduced to financial statements and how shareholders are one of the external users of these documents.The main idea behind the article is that the six biggest banks in the United States will be releasing their financial reports for the third quarter of the year.In chapter 2 we further analyzed financial statements and how users can make good use of the information to meet their needs.We were introduced on how to measure profitability from financial statements which is something useful when looking at reports from banks.
REFLECTION
After the financial statements have been released, most investors will probably be unimpressed.The economic recession has brought down the value of bank shares dramatically even though we are seeing great recoveries.Many of the big banks will face problems with repaying their debts from government loans that protected them during the economic crisis.As the deadline for third quarter financial reports are coming near, many of the CEO’s will face the pressure to produce optimistic numbers for analysts and investors alike.Companies such as Morgan Stanley and Wells Fargo are already dealing with management changes and are expected to make more money in the following year.
