Tags: Mayo | Bank | Revenue | Depression

Mike Mayo: Bank Revenue at Worst Levels Since Great Depression

Wednesday, 13 June 2012 01:41 PM EDT

Banks are set to report the worst revenue performance this decade since the Great Depression, says banking analyst Mike Mayo, managing director at Credit Agricole Securities.

Mayo, who made eyebrow-raising "sell" calls in the past on banks when the opposite was in vogue, says banks will take risks to bolster their top-line in ways that will backfire on them, similar to JPMorgan's $2 billion trading loss.

Weak economic activity and low interest rates are making it hard to find healthy returns.

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

"We feel the current environment for banks is a lighter version was taken place in Japan. Who would have thought the 10-year treasury yield would be where it is today?" Mayo tells CNBC.

The yield on the 10-year Treasury note dipped to below 1.5 percent recently as investors view the asset as a safe place to park their money even if inflation rates outpace returns.

"This will be the worst revenue growth decade since the decade of the Great Depression. I don't think the JPMorgan trading loss or the MF Global problems are one off. I think you're going to see more banks stretching for revenue growth when it's just not there and then they'll mess up," Mayo adds.

Not all banks are excessive risk-takers.

"The one bank that we like here is Wells Fargo. We've liked it all year. They have a culture of not stretching for risk."

The economy, meanwhile, continues to plod along.

In its latest jobs report, the Bureau of Labor Statistics reported the country added a net 69,000 nonfarm payrolls to the economy in May.

By comparison, January and February added 275,000 and 259,000 net jobs, respectively.

Meanwhile, the country's gross domestic product grew lackluster 1.9 percent in the first quarter of this year, down from an initial estimate of 2.2 percent, according to official data.

One major Wall Street titan see dark clouds on the horizon for the remainder of the year.

"I think we're in a tough position for the next three, four, five months," Goldman Sachs CEO Lloyd Blankfein tells MSNBC's "Morning Joe."

"We've been in a lot tougher position and the economy is not horrible, it's just not growing the way it should and there's just a lot of uncertainty," Blankfein adds.

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

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Wednesday, 13 June 2012 01:41 PM
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