US banks log better than expected results

Jul 17 2010 by Iain Laing, The Journal

US BANKING giants Bank of America and Citigroup have joined JP Morgan in reporting profits boosted by better repayments on their loans.

Citigroup earned a second-quarter net income of £2bn and Bank of America saw profits of £2.03bn in the same period. Both it and BoA beat market expectations after losses on their loans to consumers and homeowners fell. But poor trading saw both of their share prices fall in early trading on the New York stock exchange last night.

Their results followed JP Morgan, which reported earlier in the week, by showing they were benefiting from better repayments by customers although falling or static revenues showed they are having a tough job growing their underlying business.

But JP Morgan shrugged off fears over a tough quarter for the industry with a 78% jump in earnings to £3.1bn in the three months to June, helped by loan losses which have fallen by more than half to £1.4bn. The profits came despite a £358m hit from the UK bonus tax, added the bank.

Citigroup's net income was down 37% on a year ago but this is mainly because last year’s earnings were unusually high. The company has also slimmed down by shedding its brokerage Smith Barney since then. BoA was only down 3% on last year.

All three US banking giants found their earnings had been dragged down by a poor performance from their investment banking divisions in the main because of a steep fall in markets during the spring that brought the post-recession bull market to an end.