SOURCE: The Bedford Report

The Bedford Report

April 21, 2011 08:16 ET

Loan Growth Drags Down BofA and Wells Fargo

The Bedford Report Provides Analyst Research on Bank of America & Wells Fargo

NEW YORK, NY--(Marketwire - Apr 21, 2011) - Major Banks have begun to post improved credit quality. More thorough and cautious credit checks have led to fewer delinquent loans and greater financial stability. As such, Banks are setting aside less money to cover bad loans, and some are seeing loan losses recede. While credit quality is improving, the high unemployment rate has been damaging to banks' long term loan growth. Improving employment numbers will hopefully, in time, lead to a boost in loan growth across the banking sector. The Bedford Report examines the outlook for companies in the Financial Sector and provides research reports on Bank of America Corporation (NYSE: BAC) and Wells Fargo & Co. (NYSE: WFC). Access to the full company reports can be found at:

This earnings season major banks have posted lackluster revenues amid weak fixed income trading and poor performances from regional consumer banking. Citigroup and JP Morgan both posted lower first-quarter revenue compared to a year earlier as the banks struggled to convince customers to take out new loans.

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Yesterday Wells Fargo said that its first-quarter net income rose to $3.57 billion, or 67 cents per share, from $2.37 billion, or 45 cents per share, a year earlier. Revenue fell 5 percent to $20.33 billion, however. Profit gains were mainly driven by setting aside less money to cover bad loans. The bank's loan book shrank as outstanding loans to consumers declined and loans to companies did not grow enough to compensate.

Bank of America also posted a slide in revenues in the most recent quarter, hurt by lower sales and trading revenue from the record levels reported in the first quarter of 2010. The largest US bank also lost more than $2.39 billion in its home loan business.

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