JPMorgan Chase & Co., Goldman Sachs, Morgan Stanley, Bank of America and Citigroup

Published in Business and Finance on Monday, May 24th 2010 at 14:10 GMT by Market Wire
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CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: JPMorgan Chase & Co. (NYSE: [ JPM ]), Goldman Sachs (NYSE: [ GS ]), Morgan Stanley (NYSE: [ MS ]), Bank of America (NYSE: [ BAC ]) and Citigroup (NYSE: [ C ]).

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Here are highlights from Fridaya�s Analyst Blog:

Big Banks Boost Industry Profit

Following the dreadful phase of the economic downturn, the banking industrya�s profits soared during the first quarter of 2010. However, this was primarily led by the big banks, while small banks remained strained due to deteriorating credit conditions.

According to the quarterly banking industry report released by the Federal Deposit Insurance Corp. (FDIC) on Thursday, the industry made an $18 billion profit, a record since the financial crisis in 2008.

This improvement in the industry data reflects near-zero interest rates and lower reserves for losses. As a result, more than half of the industry participants reported improvements over the prior-year period.

Though the profit for the reported remained historically weak, it jumped from $5.6 billion in the year-ago period.

The biggest banks (with at least $10 billion of assets) have earned nearly 79% of the industry's total first-quarter profit. These banks together earned $14.2 billion during the reported quarter, almost double compared with the year-ago period. However, profit for small banks (with less than $1 billion in assets) increased only 16%.

The big banks include JPMorgan Chase & Co. (NYSE: [ JPM ]), Goldman Sachs (NYSE: [ GS ]), Morgan Stanley (NYSE: [ MS ]), Bank of America (NYSE: [ BAC ]) and Citigroup (NYSE: [ C ]).

Big banks enjoyed significantly lower funding cost compared to two years ago. According to FDIC, funding cost was at its lowest since 1984.

Now the question to ponder is whether this impressive industry data can be viewed as a significant step up for the industry. Probably, the answer would be aNoa�. The banking industry as a whole is not yet out of the woods as tumbling home prices, soaring loan defaults and a high unemployment rate continue to take their toll on small banks.

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JPMorgan Chase & Co., Goldman Sachs, Morgan Stanley, Bank of America and Citigroup