Analysts predict big gains for largest banks this year
Analysts predict big gains for largest banks this year
Analysts’ failure to foresee declining earnings per share for the biggest U.S. banks last year hasn’t stopped them from predicting an even bigger profit surge for 2012, Bloomberg reported.
The six largest lenders, including JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co., may post an average profit increase of 57 percent this year, according to 184 analysts’ estimates compiled by Bloomberg. A year ago, analysts predicted profit at the banks would climb 32 percent in 2011. Instead, earnings per share probably fell 18 percent as the economic recovery that analysts counted on never took hold.
Improved trading results, more investment-banking deals, expense-cutting measures and lower credit costs will lead to the increase in earnings that didn’t materialize last year, analysts say. That may provide a boost to stock prices after the financial sector was the worst-performing industry in the United States in 2011.
“The banks could get some positive operating leverage in 2012 from trading normalizing and expenses normalizing,” said Chris Kotowski, an Oppenheimer & Co. analyst in New York who estimates at least an 18 percent earnings-per-share increase for each of the six banks. “It’s not like all the news on the banks was uniformly bad all the time. The market had a bigger freakout than the companies did.”
Bank stocks fell along with earnings last year and were the worst performers among 10 industries tracked within the Standard & Poor’s 500 index. Financials dropped 18.4 percent, led by a 58 percent plunge for Bank of America.
Analysts’ failure to foresee declining earnings per share for the biggest U.S. banks last year hasn’t stopped them from predicting an even bigger profit surge for 2012, Bloomberg reported.
The six largest lenders, including JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co., may post an average profit increase of 57 percent this year, according to 184 analysts’ estimates compiled by Bloomberg. A year ago, analysts predicted profit at the banks would climb 32 percent in 2011. Instead, earnings per share probably fell 18 percent as the economic recovery that analysts counted on never took hold.
Improved trading results, more investment-banking deals, expense-cutting measures and lower credit costs will lead to the increase in earnings that didn’t materialize last year, analysts say. That may provide a boost to stock prices after the financial sector was the worst-performing industry in the United States in 2011.
“The banks could get some positive operating leverage in 2012 from trading normalizing and expenses normalizing,” said Chris Kotowski, an Oppenheimer & Co. analyst in New York who estimates at least an 18 percent earnings-per-share increase for each of the six banks. “It’s not like all the news on the banks was uniformly bad all the time. The market had a bigger freakout than the companies did.”
Bank stocks fell along with earnings last year and were the worst performers among 10 industries tracked within the Standard & Poor’s 500 index. Financials dropped 18.4 percent, led by a 58 percent plunge for Bank of America.
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