Low interest rates and fierce competition for loans will drive down third-quarter earnings at most large banks, analysts say.

Of the 19 biggest U.S. banks, nearly four-fifths will see their quarterly profit decline from the second quarter, SNL Financial said in a report published Monday. The report took the average of analysts' estimates for each bank's earnings. Earnings season begins Friday, when JPMorgan Chase (JPM) and Wells Fargo (WFC) are scheduled to report.

Analysts expect just four banks -- Regions Financial (RF), Northern Trust (NTRS), KeyCorp (KEY) and Zions (ZION) -- to show higher earnings. Those four, as well as U.S. Bancorp (USB), SunTrust Banks (STI), and Huntington Bancshares (HBAN), are also expected to show earnings increases.

Banks have already warned that loan demand has been weak in the third quarter, a trend that analysts say is likely to continue through the end of the year.

Auto sales, which have buoyed bank earnings for several quarters, slowed in September, and the federal government shutdown will reduce consumer spending and further depress loan demand, analysts say.

Low demand coupled with the Federal Reserve's ongoing low-interest-rate policy should depress net interest margins in the third quarter, analysts predict. They see margins widening at only five of the 19 banks: JPMorgan Chase, Citigroup (NYSE: C), Capital One Financial (COF), Regions and Northern Trust.

Regulatory costs are rising for many banks, but analysts expect banks to continue to reduce overhead, and they forecast quarterly expenses to fall at all but seven of the 19 banks. Additionally, they expect noninterest income to fall at a majority of the big banks due to declines in mortgage fees stemming from weakening demand for refinancing.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.