Accrued Interest submits:
Here is my take on bank earnings reports. I'm coming at this from a bond guy's perspective, so I'm a little less worried about whether certain revenues are recurring or not. By this I mean, JPM's fixed income trading revenues were probably higher than what we can realistically expect in the future. That being said, JP will probably have robust trading revenues in future quarters, just maybe not this robust. Same with the elevated NIM. Remember, bond guys don't care whether EPS is $1.5 or $1.55/share. We care about ticking time bombs.
So I'm more interested in whether banks are working through their problems. We know it will be a while before loan losses start falling, but at some point, banks will have actually provisioned enough. I don't think we're there now, nor do I think we'll be there in the next couple quarters. So what I want to see banks doing is using this period of elevated NIM/trading gains to build reserves against future.
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