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    Wall Streets Profit Rebound Fails to Assuage Wary Shareholders

    Abstract:Bank profits are starting to resemble life before Covid, but investors aren‘t buying the idea that the industry’s crisis has passed.

      Bank profits are starting to resemble life before Covid, but investors aren‘t buying the idea that the industry’s crisis has passed.

      In earnings reports this week, the top U.S. firms said they already socked away most of what they will need to cover near-term losses on loans, and theyre still benefiting from a pandemic-fueled trading boom. Yet even as the five biggest banks reported a profit rebound in the third quarter, their stocks remained laggards.

      “Financials are being treated as if they‘re victims of this pandemic when they’re really operating pretty well,” David Kelly, chief strategist for JPMorgan Chase & Co.s asset management unit, said in a Bloomberg Television interview Wednesday.

      JPM‘s David Kelly says financials are being treated as if they’re victims of this pandemic.

      Source: Bloomberg)

      The market is signaling that $50 billion the banking group stockpiled for potential loan defaults as the pandemic spread probably isn‘t coming back, and that the industry’s pain has merely been postponed. With stimulus talks bogged down in Washington, bank executives conceded that joblessness affecting many customers may take longer than previously hoped to subside. Some banks predicted loan losses, muted so far, will climb in the latter half of next year.

      For now at least, banks are in a sweet spot. The five firms increased their combined loan-loss reserves by a mere $172 million in the third quarter, down 99.4% from the $28 billion buildup in the second quarter. Trading revenue at the Wall Street firms, meanwhile, jumped more than 20% for a third straight quarter.

      在上半场大幅增加后,银行暂停关于添加到储备

      来源:公司提交的文件

      请注意:几乎$ 11十亿在第一季度增加的是由于采用了新的会计规则

      的五个最大的美国公司净收入总计季度23.2 $十亿,三倍以上,二季度及以下的水平,只有12%报告了去年同期。不过,四家最大的贷款机构股价均下跌超过今年的27%,甚至更广泛的标准普尔500个指数已经突破前期高点。银行正在超越的唯一扇区是能源。

      相同的五家银行锯利润开始后至在2007年中期下降,这是盈利的是金融危机前回升的步伐至少80%的前两年。这一次,它花了两个季度 - 假设其持有

      银行正在安慰消费者谁是偿还余额或恢复后忍程序付款。美国银行称,只有约6%的延期请求依然存在,而摩根大通表示,其传来的节目占了92%的电流。在富国银行,消费贷款为90逾期天数命中的最低水平五年以上。

      {} 27 “储备建立在我们身后,我们预计,”美国首席执行官布赖恩·莫伊尼汉的银行说。 “我们看到了一回总体稳健,基础经济的基本面,但我们不会到达那里,直到我们完全可以解决医疗保健危机。” {27} 强调“不确定性”

      花旗,世界上最大的ç编辑发卡行表示,其卡消费支出在最近几周有所回升。然而,客户在偿还债务的纪律也可以通过伤害产生较少的利息收益。银行优秀的信用卡贷款下降了11%。

      {16}

      Done Adding

      {16}{17}

      After huge increases in the first half, banks paused on adding to reserves

      {17}

      {19}

      Source: Company filings

      {19}{20}

      Note: Almost $11 billion of the increase in 1Q was due to the adoption of new accounting rules

      {20}

      {22}

      Net income for the five biggest U.S. firms totaled $23.2 billion in the quarter, more than triple that of the second quarter and just 12% below the level reported a year earlier. Still, shares of the four largest lenders are all down more than 27% this year, even as the broader S&P 500 has surpassed previous highs. The only sector banks are outperforming is energy.

      {22}

      {24}

      After the same five banks saw profit start to drop in the middle of 2007, it was two years before earnings climbed back to at least 80% of the pace before that financial crisis. This time it took two quarters -- assuming it holds.

      {24}{25}

      Banks are taking solace in consumers who are paying down balances or resuming payments after forbearance programs. Bank of America Corp. said only about 6% of deferral requests are still in place, while JPMorgan said 92% of accounts that came out of its program are current. At Wells Fargo & Co., consumer loans that are 90 days past due hit the lowest level in more than five years.

      {25}

      {27}

      “We expect that the reserve builds are behind us,” Bank of America Chief Executive Officer Brian Moynihan said. “We are seeing a return to the fundamentals of a generally sound underlying economy, but we wont get there until we fully address the health-care crisis.”

      {27}{28}

      Emphasizing ‘Uncertainty’

      {28}{29}

      Citigroup Inc., the world‘s largest credit-card issuer, said consumer spending on its cards has picked up in recent weeks. Still, customers’ discipline in paying down debts can also hurt earnings by generating less interest. The banks outstanding credit-card loans declined 11%.

      {29}{30}

      Some banks tempered their projections for the economy. Jennifer Piepszak and Mark Mason, the chief financial officers of JPMorgan and Citigroup, respectively, used the words “uncertain” or “uncertainty” more than a dozen times to describe the outlook on their calls with analysts on Tuesday. Citigroup said it now expects a slower recovery in the next two years.

      {30}

      That leaves banks facing questions on where they will find revenue growth. Despite the windfall from trading, the five firms revenue fell below $100 billion for just the second time in the last seven quarters, driven by a 13% drop in net interest income. Loans on their books fell for a second straight quarter as they faced the combination of lower demand and their own caution.

      “Sluggish loan growth and low rates create some headwinds for banks,” Jeffery Harte, a bank analyst at Piper Sandler, said on Bloomberg TV.

      {33}

      Goldman Sachs Group Inc. CEO David Solomon faced questions from a few analysts about the outlook for his firms share price.

      {33}

      “The banking sector and financials broadly are well out of favor,” Solomon acknowledged. The pandemic and the uncertainty “hurts the overall neighborhood.”

      — With assistance by Jennifer Surane, Hannah Levitt, Sonali Basak, and Daniel Taub

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