Morgan Stanley (MS), Bank of America (BAC), and Citigroup (C) are scheduled to announced quarterly results on October 14. What to watch for: 1. OUTLOOK: During the company’s last earnings call, Bank of America said it sees NII moving higher but $1B higher NII in the fourth quarter will be more “challenging” due to decline in long-term rates. The bank also sees reducing headcount by natural attrition and NCOs moderating around current levels for the next few quarters. Meanwhile, Morgan Stanley said during its last earnings call back in July that it sees $1.3B as a “reasonable” exit rate for NII to inform 2H21. The bank also anticipates loans to grow more in line with 2020 levels. During Citi’s second quarter earnings call, CFO Mark Mason said that for total Citigroup, he still expects full year 2021 revenues to be down mid-single digits on a reported basis. However, “the composition is likely to be somewhat different than we originally anticipated,” said Mason. The executive does not expect credit deterioration in U.S. card portfolio in 2021. 2. MOVING TO THE SIDELINES AHEAD OF QUARTERLY RESULTS: Late last month, Oppenheimer analyst Chris Kotowski downgraded Morgan Stanley to Perform from Outperform and removed his prior $112 price target on the shares, stating that the rating change is “based purely on valuation.” While his forward estimates are largely unchanged, with the industry’s strong showing in recent weeks his valuation model shows just 7% upside for Morgan Stanley shares. The bank stocks on his recommended list include Bank of America, Citi, Goldman Sachs (GS), Jefferies Financial Group (JEF) and U.S. Bancorp (USB). Berenberg analyst Eoin Mullany also downgraded Morgan Stanley to Hold from Buy with a price target of $95, up from $91. The analyst believes the shares are now fairly valued. At the start of 2021, Morgan Stanley was trading on 11.6 times consensus 2022 earnings, but since then, consensus 2022 earnings estimate have risen 23% and the stock has re-rated to 14.1 times estimates, Mullany contended. As a result, the analyst believes Morgan Stanley “looks fully valued.” 3. ‘SWEEPING’ RESTRUCTURING: Last month, Bank of America announced senior leadership changes it said were being made “to position the company for long-term success, while continuing to deliver for clients, communities and shareholders.” The company added five new members, including three women, to the senior management team, “further strengthening diversity at the most senior levels of the company.” Holly O’Neill has been appointed president of Retail Banking, Wendy Stewart has been appointed president of Global Commercial Banking, Cathy Bessant will become vice chair, Global Strategy, Aditya Bhasin has been named chief technology and information officer, Tom Scrivener has been named chief operations executive, and Paul Donofrio will become vice chair, the company said. Alastair Borthwick has been named chief financial officer, effective in the fourth quarter. David Leitch, global general counsel, is planning to retire in 2022 and Lauren Mogensen will become global general counsel for the company, succeeding David at the end of this year. Odeon Capital analyst Dick Bove upgraded Bank of America to Buy from Hold with a $46.50 price target after the bank announced what he called “one of the most sweeping restructurings of a management team that I have ever seen.” The breaking down of the company into more discreet units and elevation of younger people to positions of importance “will allow this bank to grow more aggressively,” Bove said.