Meredith Whitney is taking the knife to her forecasts for bank earnings once again. From marketwatch.com.
Oppenheimer again cuts estimates on Citigroup, banks
Oppenheimer & Co. analysts led by Meredith Whitney cut their first-quarter profit forecasts for U.S. banks on average by 84%, led by Citigroup Inc. (C) . Whitney increased her first-quarter loss estimate for Citigroup by four times, and expects the company to post a full-year loss of 15 cents a share. She also slashed her outlooks on Bank of America Corp. (BAC) , J.P. Morgan Chase & Co. (JPM) and Wachovia Corp. (WB) to reflect expected write-downs related to mortgages and collateralized debt obligations. "Despite cutting estimates for financials by over 30 times since November, we are confident this will not be our last reduction in 2008," Whitney wrote in a research note. "Rather as key mark-to-market indices trend lower, the housing market worsens, and the U.S. consumer comes under increasing pressure, we anticipate further downside to both estimates and stock prices."
The emphasis in bold is mine. Whilst Whitney may not be done slashing bank earnings forecasts, she is proabably closer to being done than the rest of her industry colleagues.
As I've been saying for months, US bank earnings are going to take a big hit as a fair chunk of their revenue streams have simply dried up. Many are predicting a return to a more normal operating environment for financials in the next 12 months, only problem is, the past 5 years has been anything but normal.