G-255 Earning Summary with Trade Indicators for July 16 2025

Systematic Credit Trading Model Output:

The earnings season present unique opportunities for credit traders. Our model is first to know, assess and publish this information please contact us for more:

Larry Domash

Bloomberg: ldomash8@bloomberg.net

Curve Publishing e-mail: larry.d@G-255.com

LinkedIn: www.linkedin.com/in/larry-domash-94928430

No Model Indicator changes post 2Q results for 8 issuers Wednesday AM.

G – 255 Issuers reporting results Wednesday

Bank of America

Bank of America (BAC, A1/A- attractive short) reported strong 2Q earnings. However, similar to other banks, investment banking revenue lagged. Overall revenue and earnings both grew by single digits quarter-over-quarter and year-over-year. Loans rose by nearly 7% quarter-over-quarter, and credit quality improved. Net interest income exceeded expectations as non-performing loans declined. Management maintained its 2025 net interest income estimate, with FICC revenue rising 16% year-over-year.

Financial Position: Tier 1 capital is 11.5% vs 11.8% at March 31 and 11.9% in 2Q 2024. Similar to other Big 6 banks, BAC shifted assets onto trading desks. Total debt is growing slower, while liquidity is shrinking, even as deposits increased by $100 billion year-over-year. Net debt rose by $21 billion quarter-over-quarter and $82 billion year-over-year.

Trading Model Indicator: Our credit trading model views the BAC secondary trading curve, with 71 liquid bonds (fixed and floating rate bank notes, senior holdco, subordinated bonds, and perpetuals) totaling $154 billion, as having 60 overvalued or attractive short trading indicators. The BAC 3.311 04/22/42 is the most attractive short BAC trading indicator according to our Systematic Credit Trading Model.

-The model sees Bank of America equity as an attractive long trade at $43.85 per share.

-There is a 60% chance BAC will sell bonds in the next 15 trading days.

Goldman Sachs

Goldman Sachs (GS, A2/BBB+ attractive short) reported the strongest 2Q 2025 result among Big 6 issuers, with overall revenue rising 14.55% year-over-year and 2Q earnings increasing 22.35%. Unlike several other banks, GS investment banking grew over 20% year-over-year, and equity trading had a record quarter.

Financial Position: Tier 1 capital is 14.5% vs 14.8% at March 31 and 14.8% in 2Q 2024. GS continued to expand share repurchasing and dividend payouts while deploying more assets on trading desks. Net debt on the GS balance sheet increased by $92 billion year-over-year to $210 billion.

Trading Model Indicator: Our credit trading model identifies 47 of 62 liquid bonds (fixed and floating rate, totalling $123 billion) as overvalued, with 21 generating "attractive short" indications this morning.

-The model sees GS equity as an attractive long trade at $633 per share.

-There is a 17.5% chance GS will sell USD bonds in the next 10 trading days.

Morgan Stanley

Morgan Stanley (MS, A1/A- attractive short) reported record 2Q operating results, increasing 13% year-over-year, with growth in every sector except investment banking. The company has not completed its analyst call, so it remains unclear if MS will raise earnings guidance for the remainder of 2025. Asset quality is improving, with loans growing quarter-over-quarter and year-over-year.

Financial Position: Tier 1 capital is 15.0% vs 15.3% at March 31 and 15.2% at the end of 2Q 2024. Morgan Stanley has been deploying its balance sheet to grow its lending and asset-gathering business while returning capital to shareholders. While liquidity data was not released this morning, total debt on the MS balance sheet grew by $23 billion quarter-over-quarter and $52.5 billion year-over-year. Similar to other Big 6 banks, MS has added capital to most of its trading desks worldwide.

Trading Model Indicator: Our credit trading model views the MS secondary trading curve, with 69 liquid bonds (fixed and floating rate with $157 billion of market capital), as a short trade at tighter trading levels. Currently, 58 bonds are seen as overvalued, with 24 (across all levels of the MS capital structure) as "attractive short" indicators.

-The model sees MS equity as an attractive long trade at $133.

-There is a 50% chance MS will sell bonds in the next 15 trading days.

PNC

PNC (PNC, A3/A- attractive long) reported 2Q earnings that were slightly lower year-over-year. Net interest income rose 4% year-over-year, fee income increased 4%, and PNC guided 3Q net interest income to be 3% higher. Overall reported earnings exceeded expectations by 12%. Loans grew by 2% quarter-over-quarter, while credit quality improved quarter-over-quarter and year-over-year.

Financial Position: PNC deposits rose $4 billion quarter-over-quarter and $10 billion year-over-year. While balance sheet liquidity declined by $10 billion year-over-year, net debt decreased by $2.5 billion year-over-year despite rising $8 billion quarter-over-quarter.

Trading Model Indicator: Our credit trading model generates long trade indicators for the 36 USD PNC liquid bonds (fixed and floating) totalling $45 billion, with 6 undervalued or attractive long trades.

-The model sees PNC equity as an attractive long trade at $180 per share, with the dividend growing 7.2% annually and currently yielding only 3.5%.

-There is a 20% chance PNC will sell bonds in the next 10 trading days.

Skandinaviska Enskilda

Skandinaviska Enskilda (SEB, Aa3/A+ attractive short) reported 2Q earnings that plummeted -1235% year-over-year on revenue that declined just over 1%. Net interest income dropped -8% year-over-year due to lower interest rates but exceeded expectations. Operating earnings fell 3% year-over-year. Assets under management fees were lower due to the value of the Swedish Kroner. Enskilda Bank tier 1 capital at 6/30/25 was 17.7% vs 17.6% at the end of Q1 and 19.0% a year ago. Loans grew by approximately 1% quarter-over-quarter, and credit quality remained flat quarter-over-quarter but was slightly lower year-over-year.

Financial Position: SEB announced a new share buyback program and has increased its dividend by 24% over the past three years. Deposits fell by SEK 35 billion quarter-over-quarter but remain SEK 27 billion higher year-over-year. Net debt increased by SEK 66 billion quarter-over-quarter and nearly SEK 400 billion year-over-year.

Trading Model Indicator: SEB has 9 liquid USD bonds in circulation, including Senior Preferred, Senior Non-Preferred, and AT1 USD bonds. The trading model identifies only the SEB Float 06/02/28 as an attractive short, with no other bonds deemed overvalued.

-The model also views SEBA SS equity as an attractive long trade at SEK 162.5 per share.

Svenska Handelsbanken

Svenska Handelsbanken (SHBASS, Aa2/AA- attractive long) reported 2Q earnings that dropped -12% year-over-year as net interest income fell -9% due to a stronger Swedish Kroner. Assets under management fees were lower owing to the value of the Kroner. Handelsbanken tier 1 capital at 6/30/25 was 18.4% vs 18.4% at the end of Q1 and 18.9% a year ago. Loans grew by about 1% quarter-over-quarter, and credit quality improved by 0.03 basis points.

Financial Position: While Handelsbanken continues to increase returns to shareholders, the bank holding company maintains more cash than debt and retains capital. Deposits are roughly flat year-over-year and fell by SEK 22 billion quarter-over-quarter.

Trading Model Indicator: SHBASS has 11 liquid USD bonds in circulation, including Senior Preferred, Senior Non-Preferred, and AT1 USD bonds. The trading model identifies only the SHBASS 1.418 06/11/27 as undervalued at current levels.

The model also views SHBA SS equity as an attractive long trade at its current SEK 115.5 per share.

Prologis

Prologis (PLD, A2/A attractive short) reported a strong second quarter despite declining occupancy rates for the fourth consecutive quarter. Funds from operations (FFO) rose by nearly 9%, and the PLD client portfolio remains stable. Reported earnings dropped by over 30% due to fewer one-time gains.

Financial Position: Prologis continues to use its balance sheet to support both shareholder returns and square footage and property expansion. Corporate net debt has grown by over $8 billion in the past 12 months.

Trading Model Indicator: Our credit trading model views the PLD USD secondary trading curve, with 29 liquid bonds totalling $16 billion, as attractive short output. Currently, two bonds are considered attractive short indicators, with the PLD 2 1/4 04/15/30 the most attractive. Note that 26 of the 29 PLD liquid bonds have market capital of less than $900 million.

-The model sees PLD equity as an attractive long trade at $155.16 per share.

Johnson & Johnson

Johnson & Johnson (JNJ, Aaa/AAA attractive short) reported a very strong second quarter and raised guidance substantially for 3Q 2025.

Financial Position: JNJ does not release balance sheet data until they file their 10-Q in August. However, the JNJ balance sheet has been re-levering for four of the last five fiscal quarters despite the AAA investment-grade rating.

Trading Model Indicator: Our credit trading model views the JNJ USD secondary trading curve, with 26 liquid bonds and $30 billion of market capital, as attractive short output. Currently, 16 bonds are seen as overvalued, with 6 considered attractive short indicators, with the JNJ 3 3/4 03/03/47 the most attractive.

-The model sees JNJ equity as an attractive long trade at its current price of $155.16 per share.

Disclaimer - This report is not intended as, and does not constitute an offer, or a solicitation to buy or sell any securities or financial instruments. All data, levels, opinions, and representations herein are provided for informational purposes only and should not be relied upon for making investment decisions. Past performance is not indicative of future results. The authors of this report assume no liability for losses or damages arising from the use of this information. Investors should consult with a qualified financial advisor before making any investment decisions. The information in this report is based on sources believed to be reliable, but no guarantee is made as to its accuracy, completeness, or timeliness