The Q3 earnings season ramps up in a big way this week, with 436 companies reporting quarterly results, including 114 S&P 500 members. With results from 58 index members already out, we will have seen Q3 results from one-third of the S&P 500 members by the end of this week.

The Finance sector has a heavy presence in the reports thus far and the sector’s earnings performance is lackluster at best. We knew the operating environment was tough for banks in the quarter, with modest gains in core loan portfolios offset by soft capital markets activities in a backdrop of persistently compressed net interest margins as a result of Fed policy. As a result, bank revenues are down, with bottom-line growth primarily coming from cost cuts and fewer litigation expenses.

As of Friday, October 16th, we have seen Q3 results from 15 of the 85 Finance sector companies in the S&P 500, but these 15 companies account for 39.3% of the sector’s total market cap in the index. Total earnings for these 15 Finance sector companies are up +18% on -2.6% lower revenues, with 66.7% beating EPS estimates and 33.3% coming ahead of revenue estimates. The two side-by-side charts compare the sector’s results thus far with what we had seen from the same group of Finance sector companies in other recent periods.

What the above comparison charts show is that the results thus far are weaker relative to other recent periods on all counts, except for earnings growth that is tracking notably better relative to both Q2 as well as the 4-quarter average. The revenue picture is particularly notable for its weakness, both in terms of growth rate as well as surprises. The earnings growth comparison is misleading as the Q3 growth is primarily a result of easy comparisons at Bank of America (BAC). The chart below reproduces the left-hand chart above, but excludes Bank of America from the numbers this time.

The revenue weakness isn’t confined to the Finance sector – the issue is present in all the other sectors as well, which will likely become very obvious on this week’s busy docket.

Q3 Scorecard (as of Friday, October 16th)

With Q3 results from 58 S&P 500 members already on the books, total earnings are up +3.9% on +0.1% higher revenues, with 69.0% beating EPS estimates and 41.4% coming ahead of top-line expectations. The table below provides the current Q3 scorecard.