Tags: Analysts | Bank | Earnings | Swamp

Analysts on Bank Earnings: 'Slogging through a Swamp'

By    |   Friday, 11 Jul 2014 07:37 PM

The 2008-09 financial crisis may be long over, but the country's largest banks still face major problems.

Analysts expect them to report weak earnings for the second quarter, thanks to continuing low interest rates, a lack of volatility in financial markets that curbs banks' trading opportunities and massive legal expenses, The Wall Street Journal reports.

"The environment clearly remains very difficult," Chris Kotowski, a banking analyst at Oppenheimer, told the paper. Banks will fare better when interest rates climb, but for now, they are "slogging through a malarial coastal swamp," he said.

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

Analysts predict that the six largest U.S. banks—Wells Fargo, J.P. Morgan Chase, Bank of
America, Citigroup, Goldman Sachs and Morgan Stanley—will show a combined profit drop of 10.3 percent for the second quarter, The Journal reports. Analysts forecast a 5.6 percent revenue decline.

Wells Fargo reported earnings Friday. While its profit rose 3 percent in the second quarter from a year earlier, earnings-per-share fell from the prior quarter for the first time in more than four years.

The other big banks will announce their results in coming days.

As for Wells Fargo, Morningstar analyst Jim Sinegal has a largely favorable opinion of the bank. "We view Wells Fargo's dominant market position as its largest structural advantage," he writes on Morningstar.com.

Wells Fargo has the largest share of deposits in major cities throughout the country, including San Diego, Phoenix, Denver and Minneapolis, according to Thomson Reuters Bank Insight, Sinegal says.

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

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The 2008-09 financial crisis may be long over, but the country's largest banks still face major problems.
Analysts, Bank, Earnings, Swamp
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2014-37-11
Friday, 11 Jul 2014 07:37 PM
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