U.S. Banking Quarterly Comment: 4Q16 (Optimism Hasn’t Translated into Growth Yet)

...Net Income Generally Lower: Results for the largest 18 U.S. banks included in this report were generally weaker on a linked-quarter basis, with 11 of the 18 banks reporting lower net income than 3Q16. However, quarterly results were higher from 4Q15 for virtually of the banks included in this report. Highlights during the quarter included improved trading results, generally higher net interest margins, well-controlled expenses, and lower credit costs. Partially offsetting this, large banks reported modest loan growth on a linked-quarter basis, weaker mortgage revenues, elevated capital ratios which are impacting certain return metrics, and hedge ineffectiveness for some. Most banks are guiding to improved results in 2017, aided in part by two expected interest rate hikes. Election Outcome Aids Trading Results: Trading activity benefitted from the outcome of the U.S. presidential election and the Federal Reserve's interest rate policy as market participants re-positioned portfolios across...

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