Anthony Davis, a banking analyst and head of the
financial institutions team at Stifel Nicolaus is a tad worried about some
points that could affect the bank-stock rally in a negative way. According to Davis , the growth rate of
banks pertaining to earnings has started to slow and loan growth will also be
weak. Revenue will also be influenced by short and long-term interest rates,
which will be at an all time low.
The banking industry is up against a tough
obstacle. Stocks of banks are not cheap; data at Stifel Nicolaus shows clearly
that all the banks in their roster trade at 13 times expected earnings over the
next year, which is only 91% of the average from way back in 1995 through a
year back.
Morgan Stanley(NYSE:MS) took the lead in Wall
Street banks going up by 46 cents or 2.65% to $17.86 on Thursday. Citigroup
Inc.(NYSE:C) and Zions Bancorporation(NASDAQ:ZION) moved up by 1.8 %, or 65
cents, to $35.79 and 2.5%, or 55 cents, to $22.41 respectively.
In the S&P 500 index, banks
have always ruled the roost among the 10 industry groups within the index. The
S&P 500 index has shot up by 7.5% after mid-July and 14.7% overall. The performance of banks has been consistent
for the entire year and they have experienced a jump of 11% 23.8% overall in
the above mentioned timelines.
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