From Michael P. Regan at bloomberg.com:
If you believe the top executives at the biggest U.S. banks, you’d think there wasn’t much to worry about in credit markets outside of the energy space.
For example, on Tuesday morning Bank of America’s chief financial officer, Paul Donofrio, said that he had not seen asset quality change much outside of energy, that credit-card losses were at a “historic low point” and that loan growth should be in the mid-single digits. Last week. JPMorgan Chase CEO Jamie Dimon said corporate debt and credit card conditions were as good as they’ve ever been. Beyond energy, the loan portfolio is in “excellent shape,” Citigroup CFO John Gerspach said.
The problem? The market doesn’t seem to believe that the deterioration in credit will remain quarantined. The KBW Bank Index is down 14 percent this year, trading near the lowest level since October 2013. The index of 24 banks has plunged more than 20 percent since it peaked in July at the highest level since the Lehman Brothers bankruptcy in 2008. Shares of Bank of America, Citigroup, Wells Fargo and JPMorgan are all down by double-digit percentages this year.
To continue reading: Bank Investors Fear More Than Oil
