U.S. Banking Quarterly Report: 1Q16 (Energy Drives Weaker Results)

...Net Income Down From a Year Ago: Results for the largest 17 U.S. banks included in this report were generally lower from 1Q15, falling on average 11%. Given the prolonged low interest rate environment and relatively weak economic trends, absolute earnings remain lackluster, with a return on assets (ROA), on average, of roughly 90bps. Results were primarily impacted by energy-related credit costs and market volatility. Some margin help from the December rate hike and generally lower expenses offset these trends. Macroeconomic Issues Impacting Results: Weaker bank earnings were not a surprise given the macroeconomic backdrop that included fears of a global slowdown, potential negative U.S. interest rates, energy-related concerns, and a strong dollar. In March 2016, Fitch revised down its 2016 growth projections for the U.S. to 2.1% from 2.5%. Despite the investment slowdown in China and sharp expenditure compression in major commodity¡producing countries, Fitch does not expect a global recession...

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