NJ5 on 18 July 2009
Here is a real analysis of the bank results:
http://finance.yahoo.com/news/Bank-profits-not-as-apf-2931947201.html?x=0&sec=topStories&pos=main&asset=&ccode=
-- Mortgages: Bank of America's second-quarter revenue was bolstered by a spike in mortgage refinancings as interest rates tumbled early in the quarter. But rates have been climbing lately, and analysts expect that surge in refinancings to taper off. And more people are defaulting on mortgages.
-- Credit cards: Credit card losses tend to track the unemployment rate, and banks are expected to keep losing money on credit cards as more people lose their jobs. JPMorgan Chase, Citi and Bank of America all have huge credit card operations.
-- Investment banking: By far the quickest recovery in the banking business has come in the investment banking sector, helping Goldman Sachs earn $2.7 billion in the second quarter. Some of the rebound has come from the big stock market rally this spring. Companies also did well because there's less competition since Lehman Brothers and Bear Stearns went under.
Analysts say that besides the problems with loans, bank earnings may suffer because the country has less of an appetite for debt.
-- Commercial real estate: While home foreclosures are increasing, the commercial real estate market is expected to keep causing loan losses for banks. Rising store and office vacancies are cutting into landlords' and developers' cash flow, and leading them to default on their mortgages.
-- Credit cards: Credit card losses tend to track the unemployment rate, and banks are expected to keep losing money on credit cards as more people lose their jobs. JPMorgan Chase, Citi and Bank of America all have huge credit card operations.
-- Investment banking: By far the quickest recovery in the banking business has come in the investment banking sector, helping Goldman Sachs earn $2.7 billion in the second quarter. Some of the rebound has come from the big stock market rally this spring. Companies also did well because there's less competition since Lehman Brothers and Bear Stearns went under.
Analysts say that besides the problems with loans, bank earnings may suffer because the country has less of an appetite for debt.
-- Commercial real estate: While home foreclosures are increasing, the commercial real estate market is expected to keep causing loan losses for banks. Rising store and office vacancies are cutting into landlords' and developers' cash flow, and leading them to default on their mortgages.
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