• 800 days Will The ECB Continue To Hike Rates?
  • 800 days Forbes: Aramco Remains Largest Company In The Middle East
  • 802 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,202 days Could Crypto Overtake Traditional Investment?
  • 1,206 days Americans Still Quitting Jobs At Record Pace
  • 1,208 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,211 days Is The Dollar Too Strong?
  • 1,212 days Big Tech Disappoints Investors on Earnings Calls
  • 1,213 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,214 days China Is Quietly Trying To Distance Itself From Russia
  • 1,215 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,219 days Crypto Investors Won Big In 2021
  • 1,219 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,220 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,222 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,222 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,226 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,226 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,226 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,229 days Are NFTs About To Take Over Gaming?
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

  1. Home
  2. Markets
  3. Other

Summarizing Bank Earnings With Two Charts

Now that the big banks have reported below are two charts that sum up how they are doing aside from the noise of "beating expectations."

Chart 1: Income before provisions for loan losses. The provision game is one way to "pad" earnings based on assumptions for future loan losses. By looking at income before provisions one gets a better sense of how profitable the banks are or in other words how well they can service provisions for loan losses. Notice the falling trend. In other words with flat to declining revenues and rising non interest expense the banks are simply generating less income.

JPM, WFC, C, BAC Pre Provisional Income

Chart 2: This one says it all. Below are the total reserves as a percent of loans and leases. In other words as provisions are reduced each quarter to help pad earnings, less is set aside for future losses. What makes this chart interesting is the right axis that shows the value of home prices over the same period. How can you reduce reserves while home prices keep falling and unemployment is rising?

JPM, WFC, C, BAC Total Loan Loss Reserve of Total Loans and Leases

 

Back to homepage

Leave a comment

Leave a comment