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Bank 3Q Revenues Look Weak (Update 1)

Updated from 8:38 a.m. to include Barclays report.

NEW YORK ( TheStreet) -- Bank third-quarter revenues look weak through the first two months of the quarter, according to a pair of research reports published Tuesday.

Deutsche Bank sees sluggish loan growth, a decline in mortgage production and debt and equity issuance down about 15% from a year ago among the disappointing factors.

"On the flip side, credit and expenses are likely to again come in better than expected," states the report from large cap bank analyst Matt O'Connor.

Trading revenue is harder to predict, but O'Connor sees a drop there as well. He cites "weaker issuance primary/sluggish advisory and lower trading volumes (we believe both Q/Q and yoy) partially offset by tighter credit spreads and a pick up in both equity and FX volatility."

O'Connor expects revenue to be flat to lower vs. the second quarter at all the largest U.S. banks, with JPMorgan Chase (JPM - Get Report), and Citigroup (C - Get Report) faring the worst at -6% each. O'Connor sees a 2% decline in revenue for Bank of America (BAC - Get Report) vs. the previous quarter, while he expects Wells Fargo (WFC - Get Report) revenue to be unchanged.

Barclays analyst Jason Goldberg, meanwhile, argued in a separate report that "the near-term lending environment remains subdued, while mortgage revenues are expected to drop significantly in 2H13." However, he was somewhat more sanguine on capital markets revenues, which he argues "appear to be approximating near-term expectations."

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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