U.S. Banking Quarterly Comment: 3Q18

...Bottom-Line Results Aided by Lower Taxes: Nearly all of the 19 large U.S. headquartered banks included in this report reported stronger bottom line results on a year-over-year basis for the third quarter of 2018 (3Q18). Fitch still notes dispersion in profitability across the peer group as reflected in return on equity (ROE) as shown below. Bottom line results continue to show improvement relative to the prior year due to a lower effective tax rate that has propelled median ROEs back into double-digit territory. Highlights during the quarter included continued benign credit costs and positive operating leverage (albeit with decelerating revenue growth trends). Fitch notes that banking industry capital ratios remain high relative to stated long-term targets as well as long-term averages. Pre-Tax Earnings Also Show Improvement: Results generally reflect spread and fee revenue growth, stable credit costs and solid expense management. GS, WFC and BK were the only banks that delivered softer...

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