Dakin Campbell and David Mildenberg
April 26, 2010
Main Street teamed up with Wall Street to produce something the four biggest U.S. lenders haven’t had since the banking crisis began two years ago: reason for optimism.
Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co., beneficiaries of $140 billion in taxpayer funds, reduced loan-loss provision expenses from last quarter and said the bottom of the credit cycle was past. Their investment-banking arms capitalized on fixed-income trading, leading to combined first-quarter profits of $13.4 billion, the most since the second quarter of 2007 before the crisis began. Citigroup reduced reserves for the first time since 2006.
“This quarter is confirmation that credit has turned a corner,” said Charles Peabody, an analyst at New York-based Portales Partners LLC who assigns “buy” ratings to Bank of America and JPMorgan, and a “hold” to Citigroup. Peabody doesn’t cover Wells Fargo. “You’ve heard every CEO say credit has turned, and there is nothing to be gained for them by being overly optimistic.”
Brian T. Moynihan, Bank of America’s chief executive officer, said April 16 that “the worst of the credit cycle is clearly behind us” and that economic growth is “real.” JPMorgan CEO Jamie Dimon said the economy may be poised for a “strong recovery.”
This article was posted: Monday, April 26, 2010 at 11:36 am