Bank earnings reflect the fog of war, the fog of AI

Earnings season
Goldman Sachs kicks off first-quarter earnings season when it publishes its numbers early this morning, with dozens of banks following over the next two weeks (check out our handy earnings calendar below). We'll be updating our earnings coverage continuously throughout earnings season, so check back often.

You wonder how many more of these quarterly reports we'll be getting, given the administration's push for semiannual reporting, though I'll argue again we should actually be moving in the other direction, toward more frequent reporting. One application of blockchain technology is in accounting – after all, "blockchain" is just a hand-wavey nickname for an automated, timestamped digital accounting book – and it should be possible for companies to automate their books via a blockchain-based application and then put them somewhere public, where everybody can see them in real time.

Now, I get why management would oppose this with every fiber of its being. But shareholders should actually be in favor of this. Why wait three months to hear from management when you can see what's happening for yourself in real time? I know that's tilting at windmills, but I like tilting at windmills.

In terms of what's happening right now, we should learn a lot in the next couple of weeks. Not necessarily about profitability – any reasonably run bank should be earning a profit. But banks obviously have a very intimate window into the health of its clients, and the health of its clients says a lot about the state of the economy. So, in no particular order, here are the things that we're keeping an eye on here at American Banker:

• The war. The U.S. and Israeli attacks on Iran comprised only about a month of the first quarter, so it may be too early to have any kind of definitive take on how it affected consumers and the economy and by extension banks. Any insights on this front are more likely to come during conference calls in comments from executives rather than showing up in the P&L statements. But this is an important topic, so any information from anywhere matters.
  

• AI. The heads of five of the six largest banks in the U.S. had a sit-down meeting in the White House on Friday to talk about a tool developed by Anthropic to find software vulnerabilities called Mythos that is purportedly so powerful Anthropic refuses to release it publicly, instead giving it to a baker's dozen of important, connected firms. Is that hype? Is it legit? We don't know, but it illustrates that the state of AI is moving fast, and some of the changes could be profound.

  Incidentally, the one bank whose CEO didn't go to that meeting was JPMorganChase. The bank said that Jamie's schedule didn't allow for it, but on the other hand only one bank was among the ones Anthropic did give Mythos to, and that bank was JPMorgan. 

  So we'll be on the lookout for any and all comments about AI. How banks are using it in their operations, interesting or innovative use cases, any opportunities to save money, and so on. And then also the kind of 30,000-foot, epoch-changing developments like an AI that can instantly render all of your code vulnerable to hackers and malefactors.

• Private credit. It's hard to say for sure how serious the health of the private-credit market is. There have been some folks warning that it's the next great crisis. Jamie Dimon himself used the cockroach metaphor when talking about problems in private credit. That would be a problem since banks have increasingly been doing business in the sector. Other CEOs aren't convinced there is any grand cause for alarm. I'm certainly not making any predictions, except that this is an important source of revenue and friction, and any comments about it are important.