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Financial ETFs in Red After JPMorgan Results

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

>To contact the writer of this article, click here: Shanthi Bharatwaj.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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RKH $54.67 0.00%
XLF $23.15 0.52%
KRE $38.87 0.44%
BAC $14.10 0.36%
C $44.41 0.41%


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