The banking sector continues to heal, but results are decidedly mixed across the space. Let's take a look at recent developments.
On Friday, JP Morgan (JPM) reported weak first-quarter results. Revenue for the quarter dropped to $23.9 billion, down 8% compared with the prior year, and net income for the first quarter of 2014 fell to $5.3 billion, compared with net income of $6.5 billion in the first quarter of 2013. Earnings per share dropped to $1.28, compared with $1.59 per share in the year-ago period, while the firm's return on tangible common equity fell to 13%, compared with 17% in the prior year. The results weren't pretty, but this didn't stop the board from increasing its quarterly dividend to $0.40 per share from $0.38 previously and authorizing the repurchase of $6.5 billion of common equity commencing within the second quarter of the year.
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Janet Yellen, Chair of the Board of Governors of the Federal Reserve System, gave the opening remarks at the 2014 Financial Markets Conference of the Federal Reserve Bank of Atlanta.
One of the major items that Ms. Yellen discussed was higher capital requirements for commercial banks, especially for the largest banks in the country, higher than even those required by Basel III. The way the momentum is going, it is my belief that commercial banks, especially the largest commercial banks will find themselves facing new capital rules, and, Yellen suggested, even some non-bank financial organizations should face some kind of restriction.
The banking industry is going to be restructured. And, the basic reasoning for the restructuring is the government. The government is attempting to find how it can make the banking system safer and still get from it what the government wants.
When I was learning about the banking