The big US banks have been reporting solid results lately. Whether it’s JP Morgan, Citigroup, Bank of America, or Wells Fargo, the combined profits of these “Big 4” are well over $30 billion. By comparison, analysts had estimated the combined earnings to be around $24 billion. So, the large banks have outperformed. Goldman Sachs has also doubled its profits. Outside the US, the UK-based banks are also following a similar trend. Barclay’s reported a pre-tax profit of GBP 5 billion for the fiscal year just gone by, much higher than GBP 1.3 billion posted for the previous fiscal year. Lloyds Banking Group has also published a pre-tax profit of GBP 3.9 billion for the same period as compared to last fiscal year’s loss of GBP 602 million. Clearly, banks are finding some positive momentum. The pandemic-led economic downturn was severe but swift. Loan losses have turned out to be far lower than initially anticipated. For investors, this could be a time to buy banks stock now.
Stock Performances Of Banking Stocks
JP Morgan’s stock has been up 60% over the last year. Bank of America is also up 60% on a 1-year basis. Meanwhile, Citigroup is up to some 42%, and Wells Fargo has doubled over the past 12 months. Some regional banks like Fifth Third Bancorp are also among the most sought-after banks stock to buy. Investors may think that with so much upside already baked into banking stocks, further upward movement may be limited. However, the fiscal spending, the relatively loose monetary policy, and other factors like an economic rebound point to further upside. Usually, banks perform well when we are in the initial stages of an economic upcycle. That is because there is a greater demand for loans while defaults tend to go down.
Buy Banks Stock Now
Fifth Third Bancorp’s stock has risen by 87% on a 12-month basis. The stock has more than doubled since the COVID-driven market fall of March 2020. There has been plenty of sideways movement in recent months, and the stock is up 13% over a 6-month period.