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NEW YORK (
Bank of America(BAC - Get Report),
Citigroup(C - Get Report) and
JPMorgan Chase(JPM - Get Report) are expected to lead the financial sector to 16.5% earnings growth in the fourth quarter--better than any other sector, according to an analysis of sell-side research by FactSet.
Those three banks alone will grow by a combined 54% in the fourth quarter, compared to the fourth quarter of 2011, according to consensus estimates. Tipping the scales is Citigroup, which is expected to see its earnings growth by 163.6% after it posted earnings of just 30 cents per share in the fourth quarter of 2011. Bank of America and JPMorgan are expected to show growth of 26.9% and 35.6%, respectively.
Maybe even more significant, the financial sector is supposed to show "modest" revenue growth "for the first time in several quarters." That data will be encouraging to skeptics who attributed much of the financial sector growth since the crisis to the "release" of reserves set aside to cover bad loans.
Analysts expect 7% revenue growth for the financial sector, including 13% growth at JPMorgan and 12% at Citigroup.
The bullish numbers are consistent with strong gains in financial sector stocks in 2012. Bank of America shares have more than doubled this year, while Citigroup shares are up 50% and JPMorgan Chase--despite an embarrassing and costly multi-billion dollar trading blowup by a trader nicknamed "the London Whale," managed gains of nearly 32% with just a few trading days left in the year.
Weighing down returns for the financial sector in the insurance industry, which as a result of Hurricane Sandy is expected to show very poor earnings compared to the fourth quarter of 2011. FactSet estimates insurance industry earnings will be 37.9% lower than they were a year ago. Excluding insurance, financial sector fourth quarter earnings would be up a whopping 42.9% versus the fourth quarter of 2011.
Written by Dan Freed in New York.