JPMorgan rose as much as 14 percent in New York trading after the New York-based bank reported second-quarter net income of 54 cents a share. PNC advanced as much as 14 percent after posting income of $1.37 per share, excluding one-time gains, beating estimates of $1.16. Huntington Bancshares profit rose 26 percent on fee income and commercial lending.
"The profitability of new loans going forward is just a lot higher than it was several years ago because of weakening competition and in some cases, competition that is going away,'' Chris Hagedorn, a portfolio manager at Fifth Third Asset Management in Cincinnati, said in an interview.
Wells Fargo & Co., the fourth-largest U.S. bank, led the biggest one-day gain for bank stocks in two decades yesterday after disclosing profit that beat estimates and raised its dividend by 10 percent. The Standard & Poor's 500 Banks Index jumped 23 percent yesterday, and added as much as 11 percent today.
Among the biggest gainers in New York trading, Regions Financial Corp. rose as much as 21 percent, Washington Mutual Inc. jumped 15 percent and Zions Bancorporation advanced 17 percent. Bank of America Corp., the biggest U.S. consumer bank, and Wachovia Corp., ranked fourth in the nation by assets, each climbed 12 percent.
"Just days ago we were talking about bank failures and we aren't out of the woods yet,'' Hagedorn said. "What hasn't changed is home price trends and that ultimately will be the catalyst for a lot of these financial stocks.''
Huntington, which had lost two-thirds of its value this year, rose as much as 20 percent to $6.84. The Columbus-based bank said it earned $101.4 million, or 25 cents a share, topping an estimate of 23 cents by 13 analysts surveyed by Bloomberg.
BB&T Corp., the third-biggest bank based in North Carolina, said profit declined 6.6 percent as home builders in Florida, Georgia and metropolitan Washington, D.C., stopped paying their debts. Operating earnings were 69 cents a share, missing the 70- cent average estimate of 23 analysts surveyed by Bloomberg. BB&T shares rose as much as 14 percent, extending a 24 percent gain yesterday.
PNC, BB&T and Wells Fargo have bucked an industry trend by announcing higher dividends this year. At least 16 U.S. financial firms have slashed dividends, a tally that exceeds the previous five years combined. Banks are trying to hang on to capital as U.S. housing prices fall and loan losses soar.