h interest rates going up its back to hunky-dory times for US Banks..So will there be flight of capital from India..We need to watch out?
[h=1]It’s Boom Time Again for America’s Largest Banks[/h] [h=2]Goldman Sachs shares hit all-time high[/h]
Goldman Sachs’ headquarters in New York. Photo: Micah B. Rubin for The Wall Street Journal
By Liz Hoffman and
Christina Rexrode
Feb. 14, 2017 6:58 p.m. ET
Shares in America’s banks are booming again, with Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Bank of America Corp. hitting fresh trading milestones Tuesday that seemed unreachable during the crucible of the financial crisis.
Investor expectations of higher interest rates, lower taxes, lighter regulation and faster economic growth under the Trump administration have added $280 billion in combined market value to the nation’s six largest banks since Nov. 8.
On Tuesday, shares of Goldman hit a record high, passing a bar first set in 2007 before the financial crisis. J.P. Morgan also hit an all-time closing high.
Meanwhile, Bank of America traded in line with its net worth—or the difference between its assets and liabilities—for the first time since late 2008. The bank had been trading as low as 15% of this level in March 2009.
Bank stocks overall have outperformed broader stock markets since the election. The roughly 27% gain since Nov. 8 for the KBW Nasdaq Bank Index is around three times that of the S&P 500. Markets rose further Tuesday; the Dow Jones Industrial Average climbed 92.25 points, or 0.45%, to close at 20504.41.
One reason for such investor optimism: After years of hacking away at expenses—shedding businesses, cutting staff and investing in technology that can be ramped up and down cheaply—expenses are near all-time lows across Wall Street. That means that if revenue does grow as many investors expect, the payoff could be especially big.
Essentially, all the belt-tightening at banks means each extra dollar of revenue should be more profitable than the last. “They’ve come out of this thing lean and mean,” said Ed Wachenheim of Greenhaven Associates, a $6 billion investment firm that counts Goldman, Citigroup Inc. and J.P. Morgan as its three biggest holdings.
Once revenue starts increasing, “there’s a Hopes for such positive “operating leverage”—when revenue grows at a faster pace than expenses—were in evidence during the bank-earnings season that wrapped up last month. The phrase was mentioned 11 times on Bank of America’s call with analysts, nine times on Goldman’s and six times on Citigroup’s.
Indeed, expenses at the six biggest U.S. banks in 2016 are down 13% from 2013, while revenue is roughly flat. Savings are coming from all corners of the financial firms.
https://www.wsj.com/articles/its-boom-time-again-for-americas-largest-banks-1487116682?mod=e2tw
[h=1]It’s Boom Time Again for America’s Largest Banks[/h] [h=2]Goldman Sachs shares hit all-time high[/h]
By Liz Hoffman and
Christina Rexrode
Feb. 14, 2017 6:58 p.m. ET
Shares in America’s banks are booming again, with Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Bank of America Corp. hitting fresh trading milestones Tuesday that seemed unreachable during the crucible of the financial crisis.
Investor expectations of higher interest rates, lower taxes, lighter regulation and faster economic growth under the Trump administration have added $280 billion in combined market value to the nation’s six largest banks since Nov. 8.
On Tuesday, shares of Goldman hit a record high, passing a bar first set in 2007 before the financial crisis. J.P. Morgan also hit an all-time closing high.
Meanwhile, Bank of America traded in line with its net worth—or the difference between its assets and liabilities—for the first time since late 2008. The bank had been trading as low as 15% of this level in March 2009.
One reason for such investor optimism: After years of hacking away at expenses—shedding businesses, cutting staff and investing in technology that can be ramped up and down cheaply—expenses are near all-time lows across Wall Street. That means that if revenue does grow as many investors expect, the payoff could be especially big.
Essentially, all the belt-tightening at banks means each extra dollar of revenue should be more profitable than the last. “They’ve come out of this thing lean and mean,” said Ed Wachenheim of Greenhaven Associates, a $6 billion investment firm that counts Goldman, Citigroup Inc. and J.P. Morgan as its three biggest holdings.
Once revenue starts increasing, “there’s a Hopes for such positive “operating leverage”—when revenue grows at a faster pace than expenses—were in evidence during the bank-earnings season that wrapped up last month. The phrase was mentioned 11 times on Bank of America’s call with analysts, nine times on Goldman’s and six times on Citigroup’s.
Indeed, expenses at the six biggest U.S. banks in 2016 are down 13% from 2013, while revenue is roughly flat. Savings are coming from all corners of the financial firms.
https://www.wsj.com/articles/its-boom-time-again-for-americas-largest-banks-1487116682?mod=e2tw
