(The following statement was released by the rating agency)
NEW YORK, July 23 (Fitch) Ongoing legal costs and declines in
currency and commodities (FICC) activity will subdue U.S.
over the near term, as evidenced by the banks' second-quarter
according to Fitch Ratings.
Reported net income for the 17 largest U.S. banks decreased on a
basis. For the top-six U.S. banks, core results were lower on
average, from both
the prior quarter and last year. These results reflected lower
results and ongoing legal expenses. Fitch notes that lower
and improved mortgage banking results, as well as some one-time
some revenue offset.
High litigation-related costs, mainly mortgage-related, continue
to plague the
large U.S. banks. Fitch expects these costs will remain elevated
over the near
term as several major issues are yet to be resolved. Fitch also
regulatory and compliance related costs are also on the rise at
the large banks,
which is partially mitigating ongoing cost savings through
layoffs and other
The banks continue to report historically high deposit levels,
with very high
deposit balances. The industry average LTD was just 70%, which
applicable to traditional commercial banks, in 1Q'14 as compared
to the prior
30-year average of 85%.
Fitch notes these deposits could be vulnerable to a rapid
outflow or repricing
with the QE wind-down. Most of the balance sheets are positioned
rates, and as such should benefit from an increase in rates,
particularly on the
The full U.S. Banking Quarterly Comment: 2Q14 is available at
'www.fitchratings.com' or by clicking on the link.
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: U.S. Banking Quarterly
(Environment Constraining Earnings)
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