According to market analysts, larger banks were expected to provide some impressive earnings in the last quarter of 2013. Specifically, John Butters, a Factset Senior Earnings Analyst believed that the businesses in the financial industry were expected to grow at a rate of just over 22.5%. Moreover, he also believed that all S&P 500 earnings will grow to just over 6% – with most of the growth from the financial sector.
That said, as the growth of the markets is mainly dependent on the financial sector, this situation leaves other stocks vulnerable. For example, if business in the financial industry were to decrease, growth in other areas would also be stagnated. However, while analysts were optimistic that banks will show impressive earnings, they were also cautious as this profit was mainly due to corporate restructuring, cost-cutting and layoffs within the financial sector.
How Did Some of the Banks Do?
Bank of America exceeded expectations in that the company reported a net income of $3.4 billion on revenues of $21.7 billion or 29 cents a share. Analysts forecast $21.08 billion in revenue and 28 cents a share. Moreover, for the full year, the Bank of America reported over $10 billion in profit – the bank’s best showing since the year 2007.
Additionally, Wells Fargo, the largest home lender in the US, reported a net income of $20.9 billion. The financial lender’s profit rose 16% in 2013 over the 2012 levels. However, another bank did not fare as optimistically. JPMorgan Chase’s net income was $16.6 billion in 2013 – down 17% from its 2012 totals. This bank was able to post profits in the foregoing years of 2010, 2011, and 2012; however, JPMorgan Chase was unable to turn a profit in 2013. Many experts blamed the bank’s large legal costs for this turn of events.
Around the globe, other banks fared well:
- The Axis Bank in India recently stated that its fourth quarter profit ended with an increased of 19 per cent over 2012’s fourth quarter profit.
- The Bank Muscat in Dubai reported a 9.3 per cent increase in profit over its 2012 numbers.
- The Rietumu Bank in Riga, Latvia reported a profit of EUR 55.1 million – almost double the profits the bank made in 2012.
- The state Banco República in Uruguay reported $290 million in profit. That total is $92 million more than the bank’s 2012 numbers, and more significantly, the most profitable in its history.