Battered Banks Look for Earnings Boost

Analysts are predicting Citi will earn $1.13 a share, up 8% from a year earlier, while earnings at JPMorgan Chase are expected to rise 9%, to $1.08, according to Thomson Financial.

Analysts aren't quite as optimistic for the two Charlotte lenders. BofA is expected to earn $1.20 a share, 2% lower than a year earlier. Wachovia is expected to make $1.22, up a meager 3%.

Investors will be tuning in to hear what the big banks have to say about the pipeline for investment banking, as well as proprietary trading and client risk, some say.

They will also want to know whether tightened credit standards -- both on the consumer and corporate sides -- will affect the big banks' businesses.

While large-cap bank earnings should fare better through their diversified businesses and strong balance sheets, some observers worry that the revenue banks make off of securitizing mortgages and other loans -- which generated fat profits for the banks in recent years -- could fall.

Bank stocks were pulled down in the second quarter amid jitters about how interest rate hikes would affect the banks.

Several regional banks warned that earnings would come in lower due to troubled residential and construction loans as a result of a declining housing market in the Midwest.

The KBW Bank index fell 0.9% in the quarter, while the S&P 500 rose 5.8%.

"It was undeniably a challenging second quarter for financial stocks. A spike in long-term rates fueled investor concern about the implications of rising rates and also renewed fears of credit deterioration," writes Melissa Roberts, an analyst at Keefe Bruyette & Woods, in a recent note.

"It gives people a lot of jitters about second-quarter earnings," Roberts said in an interview. "Once we get through this quarter we will get a better sense of where we are headed from here."