The Banking and Strategy Initiative

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Bank Results Season Preview Q1 2012: Commercial / Industrial credit up but consumer credit a lost cause

The latest Fed H.8 reports continues to udnerscore a losing proposition for Consumer credit as the 5% rise in bank credit reported for Feb 2012 on year is mostly increase in holding of Treasury and agency Securities up 17% with Consumer loans down 3.6%. Yet, Commercial and Industrial loans are up 7.7% and Closed end Residential loans 7.3% lending substance to frequent revisement of bank earnings upwardss with Bank of America reporting an even $0.12 cents next week despite the bloatedf equity and JP Morgan reporting $1.16 this Friday. The $22 bln in Revenues at JPMorgan, $25 bln at Citi and probably more than $10 bln in revenues at goldman Sachs with a $1 in earnings for Goldman Sachs from trading and investment banking reverts this quarter are probably the highlight. Wells Fargo also reports on Friday.

Recent Stress test successes have been overshadowed by the Citi requirement to change the capital return plans it filed. rading assets are up 101.8% in February at banks signifying much better revenue performacnce fro the trading units than have been updated. Also though Deposits are likely up they are significantly dented by the move to risky assets even as the markets look ready to dive from the peak mirroring the earlier reaction to the holiday weekend jobs report.

S&P Techs are reporting qa7% rise in earnings this quarter, most of it Apple and similarily the entire universe of S&P 500 or the smaller DJIA is likely to underperform int he coming earnings season,. And that just strnengthens the case for the rally int he banks to continue esp in stocks like Citi that have retraced half their gains for the year or Goldman Sachs whole return to a $4 EPS and anything lower even above estimates though is unlikely to really gladden the street which has already raised the bar on the Financials this year a whopping 72% in the quarter ended last week

 

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This entry was posted on April 10, 2012 by in Amitonomics, Banking, US and tagged , , , , , , , .

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