Banks are thermometers for the economy. Here are 3 things to watch when they report earnings.

"There's a lot of jargon in the average bank earnings call - net interest margin, capital markets, credit quality. But if you cut through the noise and know what to listen for, you can learn a lot about the state of the economy. Next week, many of the nation's biggest banks will report results for the three months that ended September 30. America's biggest bank, JPMorgan Chase , kicks things off Tuesday, alongside Wells Fargo and Citi, followed by Bank of America on Wednesday."

"Thanks to the government shutdown, which has halted a slew of economic data, these earnings calls could shed light on the health of both the American consumer and businesses. They may also offer insight into the AI boom and its role in the economy's growth. "You can think about banks as being thermometers of the economy," said Nathan Stovall, head of financial institutions research at S&P Global Market Intelligence."

"Credit quality is a way of assessing whether customers are making good on their loans or missing payments because money is tight. Stovall said Wall Street "is really divided" about what credit quality might look like this earnings season, with some predicting deterioration and others forecasting continued strength. "People are going to be listening closely to earnings and asking, 'Is your customer base really holding up?' he said, adding that he expects 'a little bit of slippage,' but not much change from the previous quarter."

Major U.S. banks will report results for the quarter ending September 30, beginning with JPMorgan, Wells Fargo, and Citi, followed by Bank of America. The government shutdown has stalled key economic data, increasing reliance on bank reports to gauge consumer and business health. Earnings calls can reveal credit quality trends and indicate whether borrowers are keeping up with loan payments. Banks may also show how much economic activity is being supported by AI-related investment and revenue. Market views on credit are divided, with modest slippage possible but no large deterioration expected versus the prior quarter.

Read at Business Insider