Over the past few weeks, I have gone through a host of results and many companies are still seeing earnings growth and a healthy business environment. The bank executives seem as perplexed as I am about their falling stock prices. We spoke to Paul Donofrio, the CFO of Bank of America this week. He emphasised how different their balance sheet is today, to what it was during the GFC. They have shrunk the mortgage and credit card books with FICO scores having dramatically improved. Now the loan book is growing again with commercial loans up 12% YoY in 4Q15. This is not a sign of a weak US economy. Impairments on their consumer book continue to improve, and energy - which makes up only 2% of their loan book - is not a large area of concern. Wells Fargo, Bank of America and JP Morgan are expected to continue to grow their earnings into 2016 and are trading at attractive valuations. (VIEW LINK)
Perpetual Limited is an independent and diversified financial services group providing specialised investment management, wealth advice and corporate fiduciary services to individuals, families, financial advisers and institutions.