For battered bank shares, earnings may make or break

NEW YORK- Further relief from the US bank stocks rout may have to wait until banks report quarterly results starting next month, which strategists said could give more details about the sector’s overall health after the recent collapse of some big regional players.

Bank shares rebounded Monday after First Citizens BancShares Inc said it would acquire the deposits and loans of Silicon Valley Bank, whose meltdown sparked the selloff in the sector earlier this month.

Even so, the S&P 500 bank index is down 16 percent since March 8, two days before Silicon Valley’s collapse, with the failure of Signature Bank and problems at other banks adding to the turmoil.

The bank index is on track for its biggest monthly percentage drop since the start of the pandemic in 2020, and its price-to-earnings ratio is now at 8.9 compared with 10.61 on March 8, well below its five-year average of 12.12, according to Refinitiv data.

Some say quarterly results could be key to what happens next with bank shares.

“Not until you see the numbers and hear management talk about the balance sheet and their business and what the rest of the year looks like is there potential for things to calm down,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“That could stabilize the industry,” or have the opposite effect, depending on what bank executives say, he said.

Results from the big US banks kick off mid-April when JPMorgan Chase & Co and others are due to report.

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