Big banks have started reporting their quarterly results, with JPMorgan Chase (JPM), Citigroup (C) Wells Fargo (WFC), and Bank of America (BAC) among the institutions leading the charge.

CFRA Research Director of Equity Research Ken Leon joins Yahoo Finance Live to discuss the results.

Consumer trends are a primary concern for banks, as Leon states, “we’re seeing still, a pretty healthy consumer,” but he notes that things are starting to normalize, with savings rates falling and increased credit card delinquencies. Leon sees consumers as stable—with the exception of credit card and possibly auto loans and that “overall, the credit book looks good.”

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Eyek Ntekim

Video Transcript

- When we get a read through to how all of these banks are talking about the consumer and the economy, what most notably would you be listening for on all of these earnings call? What would investors be apt to pay closest attention to here as we get some of the forecasts, but also almost the meteorologic analysis from some of these CEOs on the economy.

KEN LEON: Well, banks by their nature are a pretty nervous lot when it comes to getting payments. And we're seeing still a pretty healthy consumer. But we're also seeing back to a normalized environment where savings rates are down. We're beginning to see a pick up in delinquencies for credit cards. But nothing that we would see that's too far from the historic average.

Also, small business, middle market still looks good. Jobs, employment numbers are good. And when we look at the corporate markets, probably they're more sensitive as multinationals to geopolitical risks out of the gate in 2024. They might be a little bit more conservative on capital investment But we hit an inflection point on investment banking fees back last year. We expect 2024 to see that pent up demand for equity and debt underwriting as well as M&A.

- Ken, just on something that you mentioned a moment ago in the provisions for credit losses, that came to mind for me. Because it seemed like across the board a read through was heightened provisions for credit losses, signaling that the banks might have this anticipation of unpaid credit obligations that could rise even further from here. What's your read through there?

KEN LEON: Yeah. And we look at it closely and we do deep dives every quarter. The consumer, I've already noted fairly stable, but obviously you have to watch credit card loans and maybe auto. When you look over to commercial real estate, they've already reserved so they're releasing those reserves as loan provisions, which flows into the income statement. What does this all mean?

We don't see a distressed industry on corporate loan book, nor do we see any sovereign country risk. Of course with Citi's results, they had trading losses from Argentina and also Russia. But overall, the credit book looks good. I would say, when you get to the back half of 24, we may see the banks release these reserves if the economy stays good and the loan provisions is going at a lower rate. Time to tell, but that would be a positive for earnings in the back part of the year.