U.S. Banking Quarterly Comment: 2Q18 (Benign Credit, Lower Taxes Bring Straightforward, Strong Results)

...Earnings Up Overall: Bottom line results for the 19 large U.S. banks included in this report almost all improved on a year-over-year basis during the second quarter of 2018 (2Q18). The only bank included in this report that reported lower net income on a year-over-year basis was Wells Fargo (WFC). While bottom-line returns will broadly continue to be structurally higher due to lower effective tax rates for the industry, Fitch notes earnings are also being augmented through solid revenue growth, good cost controls and a sustained benign credit environment. Betas Increase, Remain Low: Much discussion on quarterly bank earnings calls revolved around how much deposit pricing increased during the quarter and where so-called "terminal betas" might end up as the Fed Reserve tightening cycle continues. Fitch notes that for many banks, betas have already hit terminal levels for wealth and commercial related deposits and those overall deposit betas will be driven by how much retail depositors will...

Special Report