U.S. Banking Quarterly 1Q09

...A remarkable turnabout came to fruition in first quarter U.S. bank results: the group of issuers covered in this paper reported a combined net income of $8.9bn during 1Q09 from a combined loss of $33.3bn in 4Q08. Pre-provision, pre-tax earnings (excluding goodwill impairment) increased notably in 1Q09 to $65.2bn from an extremely weak $5.4bn in 4Q08. However, a deeper look into the sources and quality of the quarter's results suggests that the reprieve is likely to be quite temporary for some institutions as credit losses continue to mount, strength from market-dependent revenues such as mortgage origination and fixed income trading are not likely to persist and net interest margins are increasingly constrained by rising level of non-performing assets and lack of willingness and ability to fully pass lower market rates to core deposits. Results in the first quarter exhibited significant improvement in fee income, in part driven by the resurgence in mortgage refinance activity as a result...

Special Report