Big Banks Brace for Earnings Season Amid Rate and AI Risks

Bloomberg Intelligence Senior US Banks Analyst Herman Chan tells Bloomberg This Weekend that major banks enter third-quarter earnings season with strong credit quality but face questions about the impact of higher interest rates, slowing investment banking activity and potential risks tied to AI financing. Speaking with hosts David Gura and Christina Ruffini, Chan provides a detailed preview of what investors should watch. Chan notes that wealth management could be a bright spot for banks including Morgan Stanley and JPMorgan, as affluent clients seek advice amid market volatility. However, he cautions that rising rates may pressure borrowing and lending, while a slowdown in dealmaking could weigh on investment banking revenues. The discussion also touches on AI-related financing, which has become a growing area of focus for banks. Chan explains how exposure to AI companies and data centers could present both opportunities and risks. Overall, he says the earnings season will be a key test of the sector's resilience in a changing economic landscape.