Big banks like
(C) and JPMorgan seemed to be heading for a 6% sequential decline in revenues, according to Deutsche Bank's data. While rising long-term rates will eventually be a boon to the banks, "higher medium/long term rates are a slight positive but short term rates are down 1-2bps--so
Rafferty Capital Markets analyst Richard Bove in a note to clients on Wednesday took a longer-term view, writing that banks balance sheets have been dramatically strengthened, and that "the earnings capacity of the industry balance sheet has improved meaningfully. In fact, when viewed against history the earnings capacity of the industry is near post Depression and WWII highs."
Bove called the strengthening U.S. economy "a wind blowing at the back of bank earnings," and added that "The balance sheets will be unlocked allowing the funds to flow into the economy driving earnings higher."
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