According to analysts at HSBC, U.S. banks are currently facing uncertainties stemming from broader economic conditions linked to tariffs and weakening confidence among consumers and businesses. Despite these challenges, banks may continue to see improved earnings momentum if the economy avoids a sharp decline.

Key Considerations

• Broader Economic Challenges:
  Escalating tariff-related concerns alongside mixed economic indicators—like unexpectedly weak consumer spending and surging inflation—are fuelling uncertainties. These developments have led HSBC to lower its earnings forecasts for 2025 and 2026 by 2% to 5%.

• Impact of Tariffs:
  Trump’s prospective measures for more stringent tariffs have raised input costs, which may dampen revenue from investment banking fees. HSBC anticipates the U.S. tariff rate will climb to 15% in 2025, expected to intensify inflation and slow economic growth.

• Resilience in Earnings:
  Despite slipping share prices, the anticipated earnings growth momentum is likely to remain if economic conditions stabilize and borrowing costs remain low, acting as a buffer against declines in net interest income.

• Specific Stock Insights:
  HSBC has changed its rating on PNC Financial Services to “buy” after a 19% fall since late November, while maintaining a cautious outlook on larger firms like Morgan Stanley and Goldman Sachs, reducing price targets accordingly.

For those interested in the performance metrics of U.S. banks, detailed profitability and efficiency insights are available.