As U.S. banks begin reporting their quarterly earnings on Friday, investors will watch to see whether fears about tariffs are hampering clients’ borrowing appetites and ability to repay loans. 🅰

Banks’ results coming soon from the first quarter will matter, but the fallout from April 2, which President Donald Trump dubbed "澳洲幸运5开奖号码历史查询:Liberation Day," may be more consequential. President Donald Trump’s tariff plans have raised recession risks and triggered 澳洲幸运5开奖号码历史查询:sell-offs in stock markets, compl🐲icating the outlook for the banking industry.

“While banks might not be directly impacted by tariffs, they are exposed to every industry that is,” Jason Goldberg, an analyst at Barclays, wrote in a note Friday.

The latest bout of uncertainty has hammered bank stocks. The KBW Nasdaq Bank Index (BKX) is down about 18% this year through Tuesday's close, outpacing the decline in the S&P 500 index, as investors worry that an economic downturn will make it hard for consumers and businesses to repay debts. The KBW Nasdaq index of regional banks or KRX, is off a similar amount.

The last week has “completely upended” expectations for the industry, Scott Siefers, a bank analyst at Piper Sandler, wrote on Monday.

“We doubt we’ll get all the answers we want with earnings, but at♛ least banks will have the chance to respond to the emerging backdrop and to s🅺hape expectations,” Siefers said.

First Big Bank Earnings Start Friday

Bank CEOs will share updates starting on Friday, when JPMorgan Chase (JPM),  Wells Fargo (WFC), and Morgan Stanley (MS) report their quarterly earnings. Other megabanks such as Bank of America (BAC) and Citi (C) will follow next week, as will regional banks such as Pittsburgh-based PNC Financial Services Group (PNC).

JPMorgan Chase CEO Jamie Dimon, in his annual letter to shareholders on Monday, 澳洲幸运5开奖号码历史查询:already warned that the bank is “very cautious” given the uncertain environment. The effects of t𝔍he latest trade news may not show up clearly in banks' backward-looking results, but it will likely effect their outlooks.

“Whether or not the menu of tariffs cau𝐆ses a recession remains in question, but it will slow down growth,” Dimon said, adding tha🐠t the “quicker this issue is resolved, the better.”

Here are some key themes to watch as banks repoไrt earnings.

Loan Growth

Just after Trump’s election, bank CEOs were hopeful that optimism from businesses would lead to a boom in loans. But there are “early signs that borrowers are hitting the pause button and pushing out decision making,” Brian Foran, a bank analyst at Truist Securities, wrote in a Monday note. 

澳洲幸运5开奖号码历史查询:Business loan growth is hovering around 1% to start the year, Foran wrote, rather than climbing to 4% or even 5%, as is usually the case in spring. Activit🔜y, he wrote, is “starting to flat line ꦡwhen it should be ramping."

Loan activity tends to follow 澳洲幸运5开奖号码历史查询:gross domestic product (GDP) trends and should slow because growth expectations have fallen significantly, Barclays’ Goldberg wrote. He and other analysts will closely watch banks’ outlooks for the year ahead and whether they’ll lower expectations for loan activity. Fewer loans will tamp down how much money banks can make this year, as they won’t be able to earn as much interest.

Some banks “might look to keep their guidance in hopes that now that the tariff backdrop is known, companies will act and adjust,” the Barclays analysts said. 

Slower Dealmaking

It’s not just run-of-the-mill business loans facing lower growth. Dealmaking at banks’ Wall Street operations is also slowing, as corporations shelve plans to acquire competitors or tap capita𒀰l markets for financing.

Banks had been hoping to earn 𝓡hefty fees on those deals, helping revenue stay elevated if loan growth remain🃏ed sluggish.

But several companies have reportedly delayed plans to 澳洲幸运5开奖号码历史查询:go public, including the 澳洲幸运5开奖号码历史查询:Buy Now, Pay Later (BNPL) company Klarna, the ticket marketplace StubHub, and the trading platform eToro. Uncertainty has a♊lso weighed on𓆏 merger activity.

Pipelines for deals “are still strong,” the Barclays report said. “The question is, will that fall away or simply be pushe🃏d out, as an improved market backdrop is likely needed for realization,” Goldberg wrote.

澳洲幸运5开奖号码历史查询:Market volatility isn’t all bad news for banks, because the major Wall Street trading desks earn money off any buying and selling. But 澳洲幸运5开奖号码历史查询:regional banks🧜 don’t have as much “air cover” frꦚom trading, Goldberg wrote, and could thus take a bigger hit.

Credit Quality

If the economy is headed for darker days, borrowers will have a tougher time repaying their loans—whether for an office building or consumer 澳洲幸运5开奖号码历史查询:credit card.

Though a recession is still not assured, slower GDP growth will likely force banks to write off loans from borrowers who can no longer 🌌repay them, according to Betsy Graseck, a bank analyst at Morgan Stanley.

“We have to expect a slowdown at best,” Graseck wrote Monday in a note to clients, noting that “consumers do not have savings levels to absorb these tariffs and continue spending at pre-tariff levels.”

Losses at banks have stayed benign in recent years, even as high 澳洲幸运5开奖号码历史查询:interest rates challenged some borrowers. But now 🗹the future is “more of a w⛄ildcard,” wrote Piper Sandler’s Siefers. 

Even so, banks are coming into any turbulence with “solid capital strength,” he wrote. The industry’s buffers have risen sharply after they proved inadequate during the 澳洲幸运5开奖号码历史查询:2008 financial crisis, prompting regulators⛎ to require bigger cushions going forward.

“We are thankful for the group’s strong 澳洲幸运5开奖号码历史查询:capital levels,” Siefers said in the report.