By David Henry

(Reuters) – The U.S.’s largest lenders will report slightly higher profits for the third quarter next week, as pandemic accounting adjustments which had already doubled their earnings this year begin to taper off.

Analysts, on average, expect JPMorgan Chase & Co (NYSE:), the country’s largest lender, to report slightly lower profits compared with the year-ago period when it kicks off earnings season on Wednesday, according to I/B/E/S data from Refinitiv.

The next Thursday Citigroup Inc (NYSE: Morgan Stanley The (NYSE) companies are expected to both report 15% increases in profit, and Bank of America Corp is forecast to increase by 35%. Wells Fargo (NYSE:) & Co, which also reports Thursday, is expected to show a massive 100%-plus jump on a quarter in which results were depressed by unusual expenses.

The week will be closed by Goldman Group Inc on Friday. Profits are expected to rise slightly.

The quarter’s earnings will be boosted by stock buybacks.

Strong equity volumes will partially offset a decrease in fixed income trading revenue, which should result in spectacular growth for investment banking.

Analysts say that the main focus of attention will be on net interest revenue. This is more than half bank industry revenue. However, it has stagnated in recent quarters. Higher interest rates and increased consumer and business loan demand are expected to cause net interest revenue to increase in the coming months.

It’s going be the big question. Gerard Cassidy from RBC Capital Markets, an analyst on the subject said that it is at the core of the business.

Some banks may be able to show more interest since they have started investing more in securities such as U.S. Treasury 5-year notes, which yielded 1% three times more recently than at the beginning.

Analysts will be looking for indications that the decline in industrial and commercial lending has not stopped. Analysts expect an increase in borrowing once COVID-hampered supply chain recovers and allows businesses to create inventories that require bank financing. Both consumers and businesses took out loans to pay off the pandemic.

Bank of America’s expected 35% increase in profits will likely be due to smaller loan losses provisions and higher net interest income. The bank’s performance may indicate its successful strategy of investing excess cash into government-backed and mortgage-backed securities.

Banks won’t see any significant benefit from the release of reserves for loan losses related to pandemics this quarter, unlike earlier this year. Goldman Sachs analyst Richard Ramsden says that 60% of the $50 billion they have put aside has been released by banks and there will be only $5 billion to go this quarter.

Citigroup and Wells Fargo will be the most benefited, he said.

The amount they have to pay to meet regulators’ orders to strengthen their control could influence the results for these two banks.

The costs of making rightful wrongs for customers impacted Wells Fargo’s profits in the year before.

M&A FEES, TRADING

Cassidy indicated that average takeover advisory fees will rise by 80% at big investment banks, and added that he expects an increase in equity underwriting.

On the other side, trading revenue is likely to drop by about 10% because fixed income markets have settled down from their record-breaking levels last year.

The average analyst estimates that JPMorgan will see a decline of 3% in third quarter net income based on lower trading revenue, higher expenses and lower JPMorgan stock prices.

Morgan Stanley, the investment bank giant and money manager, is expected to report higher results due to increased takeover advisory fees and stronger equities trading revenues.

Goldman Sachs should also see an increase in mergers-and acquisitions fees, amid the greatest global deals boom ever recorded.

Ramsden states that most banks report increased expenses more than revenues. Technology spending is necessary to keep up with the competition. Analysts worry about the fact that banks must pay higher salaries to recruit employees.