Big Four consumer banks putting the crisis behind them?

April 26, 2010 | By Jim Kim

So can we now finally say that the top four consumer banks have turned the corner? It's tempting to say, Yes. After all, Bank of America (NYSE: BAC), Citigroup (NYSE: C), Wells Fargo (NYSE: WFC) and JPMorgan Chase (NYSE: JPM) produced some spectacular results for the first quarter. The banks posted combined earnings of $13.4 billion, the most since the second quarter of 2007, notes Bloomberg.

The banks also reduced charges for loan-loss reserves and seem to be better positioned to withstand the continuing mortgage fallout, for both retail and commercial. The fact that Citigroup will be free from government ownership soon, the last major bank to be so tethered, also helps make the case that the worst is finally over. The top banks have certainly seen their stock prices rise, though it will be many years before they return to pre-crisis levels. And let's not count too heavily on the bond market as a driver of investment banking revenue. There will be lots of competition from the likes of Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS), and there's no way the bond rally we've seen can last forever. For the rest of the year, earnings are bound to moderate, keeping a cap on the euphoria.

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