While quarterly earnings were a mixed bag for many of the largest US banks, Treasury Services Businesses delivered much welcomed news for many investors. And analysts anticipate that this will only improve as 2014 progresses, despite a bumpy start to the year.
Bank of America
While quarterly earnings were decimated by $6 billion in legal expenses related to penalties for mis-selling mortgages in the years before the 2008 financial crisis, the company reported that treasury services and business lending show very positive trends year-over-year across both commercial as well as corporate client base. There was an increase in expenses of $186 million on a year-over-year basis primarily related to investments in technology for global treasury services and lending platforms, which should help fuel future growth.
Similar to BAML, Citi saw a rise in quarterly banking revenues, mostly due to marginal growth in corporate lending and private banking reserves. The company saw a 4% increase in net income over last year and higher volumes in treasury and trade solutions helped contribute to revenue growth despite the ongoing low rate environment.
Treasury and trade solutions revenues of $1.9 billion were up 1% versus prior periods on a reported basis and, in constant dollars, revenues grew 4% year over year and 2% sequentially, “as growth in fees and volumes were partially offset by spread compression”.
On the other hand, JPMorgan, reported that banking revenues fell 8% to $2.7 billion in the first quarter of 2014. The bank saw $1 billion in treasury services revenue, which is down 3% year-on-year with higher net interest income on higher deposits. That was offset by the impacts of business simplification and lower trade loans and spreads.