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NEW YORK (
TheStreet) -- Financial sector ETFs were in the red Wednesday, after
JPMorgan Chase(JPM - Get Report)
reported better-than-expected results
but its lackluster loan growth failed to impress.
The second largest bank by assets reported a 67% growth in profits, but revenue was on the lighter side. Analysts had been hoping for a pickup in loan growth, but except for the commercial banking segment, which saw a 7% increase in loans over the corresponding previous quarter, all other segments saw lower loan balances.
The dim revenue outlook and continuing problems associated with its mortgage businesses -- the bank reported a $1.1 billion provision for credit losses arising from its real estate portfolios and a loss of $1.1 billion for the impact of increased servicing costs on the fair value of the firm's mortgage servicing rights asset, among other charges -- dampened expectation for solid earnings reports from
Bank of America(BAC - Get Report), due to report on April 15, and
Citigroup(C - Get Report) and
Wells Fargo(WFC - Get Report), which report next week.
In addition, JPMorgan CEO Jamie Dimon said
that investors should not expect dividend increases for some time.
Shares of JPMorgan were losing 0.9%. Shares of Citigroup and Wells Fargo were down by 1.5% each, while Bank of America saw its shares slip by 1.1%.
Regional Bank HOLDRs(RKH) was shedding 1.5%. JPMorgan accounts for about 23% of its portfolio, while Wells Fargo takes up another 20%.
Broader banking sector ETFs such as
iShares Dow Jones US Financial Services ETF(IYG) and
SPDR Financial ETF(XLF) were losing about 0.8% each.
Regional banks were also under pressure, with the
SPDR KBW Regional Banking ETF(KRE) down by 1.2%.
Banking stocks have not participated in the rally in recent months, weighed by concerns about impact of new regulations, as well as a tepid revenue outlook. Some analysts have argued that bank stocks need to rally for the stock market to move higher.
--Written by Shanthi Bharatwaj in New York
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