Dividends and Large US lenders Top Profit Expectations

One of the most watch quarterly earnings because it shows the strength or weakness of the economy is the state of the largest banks in the country. In mid July, 3 of the largest banks reported strong earnings which is good news. While the outlook can be varied, the reality is the banks are doing very well.

In an article by Reuters, JPMorgan Chase and Wells Fargo both reported drops in net interest margins as they paid more for deposits. JPMorgan lowered its outlook for net interest income to $57.5 billion from $58 billion. Which in reality is still doing very well and one should maintain high expectations for the next quarter.

JPMorgan’s net income surged 16% to $9.65 billion as a tax gain and higher net income over shadowed lower activity on the trading floor. Net income rose 4% to $29.57 billion.

At Wells Fargo, the share price is slowly recovering from the account opening scandal of a few years ago and is currently dragged down by the search for a new President. Wells is recovering and when a new President is finally announced the shares should do better. Net income applicable to common stock rose to $5.85 billion or $1.30 share up from $4.79 billion or .98 a share.

Goldman Sachs is heavily influenced by its trading activities and is fixed income business was down as net revenues fell 13%. The affects were interest rate products and currencies changes. The bank’s net earnings applicable to common shareholders fell 6% to $2.20 billion in the quarter. Earnings per share fell to $5.81 from $5.98 a year earlier. Total net revenues fell 2% to $9.46 billion.

Linking to dividend paying stocks, if you owned the banks either directly or in an ETF, then they are still worth holding on to because they are producing solid profits. The bank shares may not double, but the dividends are still flowing. When you buy bank stocks as long as the economy is doing well, then profits should be consistent and dividends almost guaranteed.

There are more questions than answers, till the next time – to raising questions.

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