US biggest banks post 13pc drop in revenue

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NEW YORK, April 26 (Bloomberg): The biggest percentage drop in quarterly revenue in three years, driven by lower lending and reduced fees, is damping investor appetite for shares of the six largest US banks. Net revenue at the six lenders -- Bank of America Corp (BAC), JPMorgan Chase & Co (JPM), Citigroup Inc, Wells Fargo & Co (WFC), Goldman Sachs Group Inc and Morgan Stanley -- fell 13.3 per cent in the first quarter from a year earlier, according to data compiled by Bloomberg. Pretax pre-provision profits, which exclude taxes, loan-loss provisions and one-time items and are considered a better gauge of profitability than earnings, slid 40.2 per cent. While five of the banks beat analysts' estimates, and JPMorgan and Wells Fargo reported record quarterly earnings, anemic revenue and a steady drop in pre-provision profits have kept investors at bay. Since JPMorgan reported earnings April 13 with a 67 per cent rise in net income to $5.6 billion, the KBW Bank Index of the 24 largest US banks has fallen 3.5 per cent as the Standard & Poor's 500 Index climbed 1.6 per cent. "You're seeing people backing off of exposure to this space because of the lack of loan growth and poor revenue growth," said Paul Miller, a former examiner for the Federal Reserve Bank of Philadelphia and an analyst for FBR Capital Markets in Arlington, Virginia. "It's not a sell-off -- it's more of a slow drift down. These stocks are going to trade very weak" until their loan books and revenue start to grow.