U.S. bank earnings generally improved during the first quarter, but these levels will be difficult to sustain over the rest of the year, says Fitch Ratings in a new report.
The rating agency says that revenues generally fell for the large U.S. banks, but reported net income improved.
“Lower provision expenses and a concerted effort to control expense growth offset lackluster top-line performance,” Fitch says.
Looking ahead, Fitch expects mortgage revenues to decline industry wide in 2013 given lower refinancing activities. It also notes that the first quarter is generally the strongest period for banks.
Moreover, banks are relying heavily on capital markets revenues; which, Fitch notes, are inherently volatile from quarter to quarter, and susceptible to sharp declines in the event of difficult markets. And, it says, that legal and regulatory costs remain elevated; with limited visibility into lifetime losses.