Are Banks in the U.S. Making a Comeback?

Equities Editors Desk |

NYSE:BACThe Federal Deposit Insurance Corp. (FDIC) announced that the banking industry grew profits by 21 percent to $34.5 billion in the second quarter with consumer lending increasing as well. Almost two-thirds of U.S. banks reported better earnings in Q2, though revenue only grew by $1.3 billion.



In addition, the earnings growth was also very top heavy, as the top 1.5 percent--those with assets of $10 billion or more--accounted for 77 percent of the profit. Top banks such as JP Morgan Chase (JPM)Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C) reported solid earnings in Q2, due in large part to their consumer lending businesses such as mortgages and other private loans.

Though banks have expressed more interest in lending and have been loosening the credit markets, the question is whether consumers and businesses are willing to borrow. As major question marks affecting the economy continue to loom, consumers and businesses may once again feel the need to hold off on major purchases and investments.

Consumer confidence as measured by Conference Board’s index fell to 60.6 for August, marking the lowest level in nine months and a steep drop from the revised 65.4 for July. Some of the more prominent consumer concerns include the prospects for employment opportunities and income growth. Rising gas prices have also played a factor.

Unless conditions improve, consumers and businesses may be more reluctant to take on additional debt until they are more certain that they'll have the ability to pay it off.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
GLV.B:CA GLV.B:CA n/a n/a n/a 0
C Citigroup Inc. 58.05 0.28 0.48 16,916,534 Trade
JPM JP Morgan Chase 87.39 -0.14 -0.16 16,090,092 Trade
BAC Bank of America Corporation 23.07 0.13 0.57 111,666,799 Trade
WFC Wells Fargo & Company 55.25 -0.08 -0.14 18,999,983 Trade

Comments

Emerging Growth

NXT-ID Inc.

Nxt-ID Inc provides products, solutions, and services that have a need for biometric secure access control. Its lines of business include mobile commerce; law enforcement and biometric access control applications…

Private Markets

Knightscope

Autonomous security robots providing advanced detection capabilities at $7 per hour - aiming to define the future of security. Help #StopTheViolence.

XY Find It

Founded by serial entrepreneur Arie Trouw, XY Findables follows a single guiding principle: customers should never lose anything important again. With over 50,000 users around the world, more than 100,000…