The financial sector, which accounts for around one-fifth of the S&P 500 index and started off 2015 as an average performer, has set an upbeat tone this earnings season. Several factors including fewer litigation charges, effective cost control measures and modest improvement in core businesses has given Q2 earnings a boost and sent shares to the positive territory.
The Zacks Earnings Trend also bears evidence to this burgeoning trend especially on the earnings front. Total earnings for 41.1% of the sectors total market capitalization (reported so far) are up 11.7% on flattish revenues (down 0.1%) with beat ratios of 68.8% and 50%, respectively. The performance bettered what we saw from this group of Finance sector companies in other recent quarters.
Overall, higher investment banking activity thanks to solid deals in the U.S. ranging from mergers and acquisitions to IPOs along with loan growth, sound trading business and cost containment efforts seem to be holding the key to the recent success. Let’s take a look at the big banks’ earnings which released early this week and in the last: