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Earning season gaining steam today with results from Big Banks, Bank of America, City Group, Goldman Sachs, all reporting before the bell this morning. Bank of America beating profit estimates on strength and investment banking and trading, but profit still taking a hit from rising deposit costs. City Group beating expectations following growth and investment banking and wealth management. And Goldman Sachs also reporting a beat. There's a theme here with third quarter profit up 45% from a year ago. Boosted by strength and investment banking. During us now, we want to bring in Nathan Stoval. He is S&P Global Market intelligence Director of Financial Institutions Research. Nathan, it's great to have you there. So I rattled through some of the headlines here that we're getting from their reports that were out this morning. The overall theme to me seems to be that the situation that the overall theme right now is improving for banks. Where are we in this recovery and what was your biggest takeaway from the reports we got this morning?

I I I think that's right. I mean, there's lots of positive things to to see in here, whether you look at the investment banking piece that you that you alluded to. Not only is that positive from earnings perspective, but I think it speaks to increased risk appetite among corporates. You know, banks are thermometers of of their economies and when you talk about the big market folks, like the Goldmans and the cities and the BOFAs of the world, we're actually seeing their corporate clients willing to take a little bit more risk, pursue more deals, stronger in particular on things like debt underwriting. But the other thing I'd really point to is heading into this quarter, the big question was going to be on credit. And where we going to see real cracks in the armor? We haven't. I mean, really haven't seen any real deterioration, both from the commercial lending segments or the consumer lending segments. So a lot of holding up and and signs of pointing to either a soft landing or almost a no landing scenario, which is very encouraging for for the US economy and certainly bank stocks.

And Nate, so as we think about some of the kind of checklist items that investors need to be keeping in mind, of course, investment banking, one piece of that is across all of the banks, that's been incredibly important and one of the kind of bigger nods that we had seen came out from City Group here this morning. Investment banking revenue up 31%. One of the other checklist items for us was net interest income and what are you seeing more broadly across the board here from the banks that have reported so far?

Sure. Well, there's sort of two pieces to that, one being when are we going to see funding pressures ease? We haven't really kind of seen that yet. We we are still seeing deposit costs migrate higher and that's been the real impact of of higher rates and and higher cost funds continuing to to turn over on bank balance sheets. And the real question is going to be when do we get that relief? We didn't expect we would see that really show up in Q3 results because we haven't seen rates come down on on deposits until the last few weeks of the quarter. The good news there is we're seeing improved guidance from the banks that have reported, and from the calls we've heard, we're we're hearing that the customers are not pushing as much for higher yielding accounts. So that's positive for net interest income and interest margins more looking into Q4 and into next year. On the broader piece on the volume side, deposit balances are are holding up okay. We've seen sort of a mixed bag there, some pressure and some some that have reported some growth in others. Loan side, you've actually seen modest growth there, but we've actually seen some encouraging prints from both PNC and BOFA. So it it as I said, it's a bit of a mixed bag, but but I think the picture is getting a little bit better. And if you think about where we were starting heading into this quarter, there was a lot of fear there of how ugly that could get and whether or not there would be improvement soon. And I think these banks are guiding that we are going to see better better days ahead there.

So then what does that improvement look like as you look out into 2025? It sounds like you're encouraged here by what that picture is going to look like. And then going back to what your comments just were on net interest income, does that really point to the fact that this story is likely to be complicated here for the quarters to come?

I I I think that's really well said. It is going to be complicated because it's not so much that we're going to get a lot of growth or that things are going to get a lot better. It's more that they're better than what expectations were. And and that's one of the weird things about this quarter in particular is that it's not that it's this barn burner of a quarter. It's that heading into the quarter, expectations were not great. The street was really, really worried and uncertainty was very much weighing on the group, not only from a net interest income and a margin, but but certainly from a credit perspective. And the fact that you aren't seeing a lot of negativity come out of the banks that have reported, I think is one of the reasons you saw a rally on Friday and that the stocks are holding up. And I wouldn't be surprised if you saw continued strength after the prints today.