Despite a respectable margin of earnings outperformance vs. forecasts, JPMorgan is up just 0.3% in the pre-market and Citibank is down about 0.3%. Whatever banks earned during the first quarter, their prospects for earnings growth don’t look especially appetizing.
As Asia Unhedged noted on Monday, US banks’ price earnings ratio is in the mid-16’s, right where it was in 2007 before the financial crisis. Loan growth, net interest margin, balance sheet flexibility and trading capacity are all much reduced. By historical criteria, that is, banks look expensive.