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Banks are in the money
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July 15, 1997: 9:14 p.m. ET
Chase, Citicorp beat expectations, signaling sector-wide pickup
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NEW YORK (CNNfn) - The bank sector's earnings per share are up an average of 12 percent this quarter, and bank stocks have outperformed the overall market for the past 3 years.
So how are the nation's money counters getting so much money to count?
It was a billion dollar second quarter for Chase and Citicorp as those banks easily beat Wall Street's expectations.
The only blemish was Wells Fargo. Net income there fell 37 percent as the bank continued to digest First Interstate, an acquisition from last year.
"Commercial business is beginning to pick up, which is sort of typical late in the economic cycle," said Robert Albertson, a bank analyst at Goldman Sachs. "We were waiting for a long time for it and that is helping to offset the slower consumer revenue momentum."
"Secondly … the credit card business is starting to improve," Albertson said. "Most of the numbers coming in this quarter show a 'plateauing' or a slowing in the card chargeoffs and everyone is breathing a big sigh of relief."
That's because banks are now focusing on credit quality instead of quantity, reviewing credit histories more closely and issuing fewer cards.
Consumers also are racking up credit card charges at half the pace of last year.
Analysts forecast the only trouble that may be brewing is increased competition among banks and from brokerages.
"You've seen several commercial banks make acquisitions of smaller regional brokerage firms this year, and all of them believe quite sincerely that they are going to grow revenues as a result and gain market share because they now offer one-stop comprehensive financing for their customers," said David Berry, a banking analyst at Keefe Bruyette & Woods. "At the same time I don't think Merrill Lynch is planning to lose any business."
Most wall street analysts expect bank earnings growth to continue as long as economic growth remains strong and inflation stays weak. 
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