For the 1st time in at least a decade every Large-Cap Bank under coverage beat consensus EPS expectations despite estimates rising into results. Every bank saw both its loan loss provision and net charge-offs come in better than consensus forecasts and released loan loss reserves. Most also exceeded revenue expectations, as higher-than-anticipated fee income more than compensated for softer-than-modeled net interest income. While most banks missed on net interest margin and loan growth was muted, deposit growth exceeded expectations with balances at record levels despite a further reduction in rate paid. Expenses were higher than expected, particularly incentive driven employee costs, though higher-than-anticipated fee income was a driver. In addition, most called for better controlled costs in 2Q21. 

We expect results to remain solid in 2Q21. For 2Q21 relative to 1Q21, we expect: higher net interest income reflecting modest loan growth (consumer outpacing commercial), mixed net interest margin performance (some modestly up, others modestly lower), and an extra day; varied fee income trends (IB pipelines at record levels, equity markets at all-time highs and service charges/card fees seasonally better, but trading typically lower and mortgage originations/margins expected to decline); stable expenses after 1Q21 was higher than expected (though y-o-y positive operating leverage remains tough near-term); an increase in loan loss provisions though loan loss reserve releases are likely to continue (albeit at a lower clip than 1Q); NPA and NCO ratios remaining historically low; stable to slightly higher tax rates; and a lower average share count (full impact of 1Q buyback and expectations of more repurchase in 2Q).