Next Few Quarters To Be Challenging For Banks

Richard X. Bove, Vice President Equity Research (Financial Sector), Rafferty Capital Markets, LLC paints a somber future for banks in his analysis “The Momentum is Gone – Banks Must Earn Their Profits” of October 23, 2013. The analysis, covering five quarters of data across a selection of universal banks, trust banks, regional banks and investment banks, makes the key point that the conditions that allowed banks to report improving operating results (y-on-y) for 16 quarters no longer exist. Henceforth profits will need to be generated out of the ‘knitting’ so to speak – lending money at better margins. But this…