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Today, Wells Fargo reported  record quarterly earnings of US$3.8bn, up nearly 50% on the same quarter last year. JPMorgan kicked off the reporting season last week with quarterly net profit growth of 67%. The country’s other banking giants—Bank of America, Citigroup and Goldman Sachs—shared less encouraging news, with first-quarter profits down on last year.

What all of these banks have in common, however, is falling revenues. From racy investment banks to retail-focused lenders, America’s largest banks are still shrinking. Releasing provisions and cutting costs can only go so far; a true recovery will begin when top lines start to grow again.

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It was a banner year for banks in Indonesia. Year-end data from the country’s central bank, released today, shows that lenders made Rp57.3trn (US$6.4bn) in 2010, nearly 30% higher than the year before and almost double the result five years ago.

Bank loans in Indonesia grew by 23% last year, and yet the system’s overall non-performing loan ratio ended the year at 2.6%, down from 3.3% the year before. Listed Indonesian banks enjoy the highest price-to-book ratio among their peers in Asia, driven by region-topping levels of profitability. Banks in the country are so profitable, in fact, that the central bank urged them not to pass on a recent interest rate hike, given that banks’ lending margins, in the words of the economic minister, are already “too high”.

Sberbank, by far Russia’s largest bank, reported quarterly earnings today. Its net profit in the first nine months of the year, Rb109.6bn (US$3.5bn), is more than ten times the total in the previous year. A steep fall in provisions helped, as did a rise in fee and commission-based income.

Russia faces many daunting challenges as it recovers from a severe recession. But one important thing it has going for it—and a crucial advantage in relation to other large economies—is that it will not suffer from the need to deleverage huge volumes of private debt. Since the start of the year, Sberbank has grown its loan portfolio by nearly 8%, with similar rises recorded for both corporate and consumer loans. Net interest income, however, is 4% down on the previous year, thanks to falling interest rates and “competition for good borrowers”, the bank said. Struggling to serve rising demand from borrowers is nonetheless a challenge that many other banks would welcome.

It was a rare good day to be a Greek bank. Suggestions that the European Central Bank may extend its government bond purchasing programme gave hope to lenders sitting on stores of shunned “peripheral” euro-zone bonds. But even after today’s boost, Greek bank shares closed at around half of their value at the start of the year. Recently published financial results from the country’s largest lenders showed steadily rising provisions against sour loans, with little sign of a let-up any time soon.

In the US, corporate profits set a record (in nominal terms) in the third quarter. In relation to GDP, profits were the healthiest they have been since 2006. But not all industries are participating equally.

An article at the parent site digs into the details and finds important differences in the shape of the profit recovery for non-financial companies and financial firms. More specifically, banks do not appear to be participating in the upturn with the same zeal as non-bank financials or non-financial corporates. Could this mark the beginning of a steady decline in the importance of banks to the broader economy?

The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.

Although each passing quarter puts more space between Mexico’s banks and the severe recession of 2008-09, the country’s largest lenders remain hesitant. Even compared with last year, the toughest operating environment for banks in more than a decade, third-quarter earnings at the top five financial groups—which control about three quarters of all banking assets—were distinctly ambivalent.

While most of the banks reported year-on-year earnings growth in the third quarter, this was generally due to a decline in loan-loss provisions, as non-performing loan ratios steadily return to their historically average levels. In terms of core business, Mexico’s low interest rates continue to put pressure on net interest income nearly across the board.

But while earnings did little to impress, the third quarter nonetheless suggested a possible inflection point in credit growth.

Read more at Financial Services Briefing: “Cautiously optimistic” (November 2nd)

A recent story in the Financial Times notes that all of the banks in America’s S&P 500 index have reported third-quarter earnings and, taken together, these large-cap lenders comfortably beat analyst expectations. (Article here; subscription required.)

Digging into the data, the story of the third quarter for American banks is more nuanced than simply “beat consensus”. When it comes to net income, nine out of ten of the largest banks in the S&P 500 did indeed surpass expectations, sometimes spectacularly so (Suntrust and Bank of America). Third-quarter revenues, however, mostly disappointed; seven out of ten of the largest banks missed consensus estimates on this measure.

Although welcome, falling loan-loss provisions largely explain the surprisingly robust earnings in the third quarter at big banks. Underlying revenue growth remains disappointing, a worrying sign for the longer-term health of the American banking system.  

The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.

For the first time in more than two years, Swiss banking giant UBS recorded a quarterly net inflow of funds at its asset management arm. Executives at the bank, however, were careful not to trumpet the development as an inflection point in the firm’s fortunes, even though the inflow came a quarter ahead of previous guidance.

The reserved reaction was also warranted because the rest of the bank’s third-quarter results were almost uniformly awful. Earlier, Swiss rival Credit Suisse released a similarly downbeat set of results, although not as uniformly gloomy as at UBS.

Read more at Financial Services Briefing: “Squeezed” (October 27th)

A chart-heavy story over at the parent site sets the scene for what could be a brutal batch of quarterly earnings reports from banks. The indications are that a marked slowdown in trading activity will dent investment banks’ earnings, while patchy economic recoveries will dampen consumer-facing franchises, particularly in Europe.

The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers.

Executives at Dutch financial group ING are in two minds. On purpose. As a condition of its €10bn state bailout, ING must shed its insurance unit by the end of 2013, returning the group to its banking roots. Thus, the group is in the process of splitting itself in two, making for an unusually disjointed feel to its recent earnings announcements.

ING’s second-quarter results, published on August 11th, highlighted the company’s mixed fortunes. The group’s banking business is recovering smartly. It is a different story at its insurance arm.

Read more at Financial Services Briefing: “Split personality” (August 12th)

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