U.S. Banking Quarterly Report: 4Q15 (Oil Price Pressures Emerging)

...Net Income Generally Lower: Results for the largest 17 U.S. banks included in this report were generally lower on a linked-quarter basis, with 11 of the banks reporting decreased net income sequentially. Given the prolonged low interest rate environment and relatively weak economic trends, absolute earnings remain relatively lackluster, with a return on assets (ROA), on average, of less than 100 bps, well below pre-financial crisis levels. Results were impacted by market volatility, interest rate uncertainty, and pressures in oil & gas. Offsetting these trends were incremental spread income growth, still very benign credit costs, and moderation in large litigation related builds (excluding GS). Fallout from Oil Prices Emerging: Following the precipitous drop in oil prices last year, which has accelerated into the New Year, many of the banks reported further loan loss reserve builds. (Refer to the table on the top of page 2 for detailed information on energy-related exposure). Exposure to...

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