By Kevin Grewal, Editorial Director at www.SmartStops.net
NEW YORK (TheStreet) -- Despite the Securities and Exchange Commission's allegations of fraud at Goldman Sachs (GS), taxpayer infusions that propped up U.S banks in 2008 and 2009 may have paved the path to prosperity for some of the nation's largest financial institutions.
In the first quarter of the year, the nation's largest bank by assets, Bank of America (BAC), boasted a $3.2 billion profit and returned to profitability for the first time in three quarters. A big part of this profitability was driven through strong investment banking numbers and operations inherited in its acquisition of securities firm Merrill Lynch. In fact, the operations inherited from Merrill accounted for more than half of Bank of America's profit and 30% of its revenue, primarily from its fixed-income trading.
To further bolster Bank of America's appeal, five of its six business units were profitable during the first quarter and consumer credit delinquencies seem to be on the mend. Among credit-card users, the number of loans at least 30 days late declined, enabling the financial institution's credit-card unit, once the institution's largest loser, to earn $952 million during the quarter.As for the future, Bank of America is focusing on growth in Asia and Europe as well as utilizing relationships between Merrill Lynch's talented array of financial advisers and Bank of America's corporate bankers to boost revenue. Additionally, the bank is contemplating revamping its consumer pricing model, with the possibility of including a maintenance fee for certain accounts to soften the revenue blow that is expected to result from eliminating overdraft fees and other traditional charges. Bank of America is up 22.3% year-to-date and closed at $18.41 on Friday. Another financial institution that generated healthy profitability in the first quarter was JPMorgan Chase (JPM). The financial institution reported net income of $3.3 billion for the quarter with strong performances from its investment banking and fixed-income trading arms. Solid results were also seen in asset management, commercial banking and retail banking. Much similar to Bank of America, JPMorgan witnessed improvements in consumer credit delinquencies and resulted in a reserve reduction of $1 billion.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV