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A financial services provider in North America, offering comprehensive retail and commercial banking, wealth management and wholesale banking products and services.
Because of declining loan loss provision within banking group as a whole I fell this will reverse. When it does a large percentage of earnings growth with go out the window. A few facts over the last couple of years is that major money center banks derived 37% of earnings growth from the reduction of their loan loss reserves and 52% for regional banks. With the coming times risk and defualt rates will reverse and banks will need to once again add to load reserves thus reducing earnings substantially. For these reasons I am sour on the group as a whole for the coming year.
Fair enough. Implementing BASEL II will be costly as well. However, this will ultimately reduce the required reserves. And meanwhile, earnings have continued a surprisingly strong trend. I could name a few banks I would bet against frist, but I wouldn't listen to me and my bad CAPS rating either...
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