A momentary rebound or a lasting return to favor in American banking stocks, the markets will soon be fixed. Friday January 15, the first major American banks, JPMorgan, Citigroup and Wells Fargo, will publish their results for the fourth quarter of 2020. But if the sector has largely beaten the general indices since September, thanks to the marketing of vaccines against the Covid, it is still subject to questions. Especially since the recent increase shows that the market has already anticipated the good news.
One point should nevertheless support American banks. Share buybacks could total $ 10 billion (€ 8.2 billion) in the first quarter for the six largest US banks (including Morgan Stanley, Goldman Sachs and Bank of America in addition to those to publish on Friday), according to data compiled by the Financial Times. For analysts, banks should make full use of the option to buy back their shares granted to them by the Federal Reserve in December. Share buybacks are the primary channel for remunerating shareholders of American banks, unlike their European counterparts who prefer dividends.
Other supporting factors could also be implemented. Even though the valuation of US banks has been on a downward trend for 10 years, the fall has deepened since the end of 2018, when US rates started to fall again, slashing the income they could still earn from margins. interests. However, with the election of Joe Biden to the White House, accompanied by a majority in the Senate, inflation expectations have accelerated in the United States. In the event of an upturn in activity with some inflationary pressures, forecasters expect the yield curve to steepen in the coming months, and therefore more income for the banks.
There are still uncertainties. One of the reasons for the outperformance of the US banking sector is due to expectations of an economic recovery. But, last Friday, bad surprise, the US Department of Labor reported the destruction of 140,000 net jobs in December, against 336,000 created in November. The indicators of American activity, some of which are also published on January 15, such as retail sales, industrial production, or the University of Michigan confidence index, will therefore be important.