Oppenheimer is lowering its quarterly and full-year estimates on large commercial and investment banks including Morgan Stanley ( MS), JPMorgan Chase ( JPM) and Bank of America ( BAC), predicting troubling first-quarter earnings.

Oppenheimer analyst Chris Kotowski, in an industry note published Wednesday, says he expects further writedowns, charge-offs and loan loss provisioning at the companies. He said the companies should "post something of a recovery" in the first quarter, but results are still likely to be "choppy,"

Kotowski predicts that BofA will need about $7 billion of fresh capital to bring its tangible common equity ratio to 6%, he writes.

He also lowered his 2010 estimates for Citigroup ( C), primarily on higher loan loss provisions.

On the bright side, the analyst raised quarterly and full-year estimates on Goldman Sachs ( GS) driven by more "robust" trading during the quarter.

Overall the analyst says the banks will have "reasonably stable" core revenues, expenses and earnings before taxes, provisioning and writedowns -- a theory agreed upon by other market observers and some bank executives.

"The big event of 2009, in our minds, is likely to be the ongoing erosion of loan loss portfolios," Kotowski writes. "On this score, we expect the deterioration to continue in full swing."

Oppenheimer rates Goldman Sachs and Morgan Stanley at outperform, and BofA, Citi and JPMorgan Chase at perform.

First-quarter earnings reports are set to kick off on Tuesday, beginning with Goldman Sachs.

The former securities firm, along with Morgan Stanley and now defunct firms Bear Stearns and Lehman Brothers, previously posted earnings results a month before the commercial banks. It has since changed its fiscal year, along with Morgan Stanley, after moving to become a bank holding company in September.

On Wednesday, Richard Bove of Rochdale Securities also slashed estimates and his 12-month price target on Morgan Stanley over concerns that commercial real estate problems in the U.S. and globally "may harm near‐term profits," he writes.

The analysts' predictions for the first quarter follows Mike Mayo's pessimistic industry note earlier this week in which he said that loan losses at the large-cap banks could exceed that of the Great Depression.

Mayo has recently changed firms from Deutsche Bank to CLSA, an affiliated of Calyon Securities, the investment banking division of Credit Agricole. He was re-initiating ratings on the sector.

Shares of JPMorgan and Citi were recently rising about 1%. Goldman Sachs shares were falling 1.7%, BofA shares were off 2.2% and Morgan Stanley shares were falling 4.3%.

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