Share the article
twitter-iconcopy-link-iconprint-icon
share-icon
AmericasMarch 5 2007

US banks outwit sourpusses

Noel Coward once wrote a song called ‘There are bad times just around the corner’, although I doubt he had the US economy in mind when he wrote it. However, as far as the US is concerned, in spite of the prognostications of many, the ‘corner’ has yet to be reached.
Share the article
twitter-iconcopy-link-iconprint-icon
share-icon

This is reflected in the results for the top five American banks, where pre-tax profits, with the exception of Citigroup, continue to grow at a healthy rate. Both Bank of America and Wachovia benefited from acquisitions, of MBNA for the former, and Westcorp and Golden West for the latter. Pre-tax profit growth ranges from 0.7% for Citigroup to 62.8% for JPMorgan Chase.

Citigroup suffered from a poor fourth quarter in its investment banking activities, where increased investment has yet to be reflected in increased revenue while costs in extending the branch network and provisions for additional costs from its Japanese operation due to changes in Japanese law on interest charges have impacted the bottom line.

Net interest margins appeared to be stabilising during the fourth quarter of 2006 despite competitive pressure on loan yields and deposit costs. Banks active in sub-prime lending (Citigroup, JPMorgan and Wells Fargo) saw increases in mortgage losses as the year came to a close while Wells Fargo and JPMorgan saw increased losses on auto loans. Citigroup is also seeing rising losses on its loan book in emerging markets.

However, for all these banks, the sub-prime market remains a small fraction of their total loan book and even if this sector becomes badly hit the overall effect should be small.Top five US Banks: 31 December, 2006 ($m)

Was this article helpful?

Thank you for your feedback!

Read more about:  News , Americas , US