Banks that successfully weathered the last financial crisis are in better shape to ride out the next three years, said Jason Goldberg, managing director and banking analyst at Barclays, to CNBC on Thursday.
US Bancorp, Wells Fargo, and JPMorgan Chase were some of the picks that Goldberg pointed to as high-quality names without a lot of European exposure.
“It’s tough to forecast what the next three days or three weeks will bring,” he said. All 10 S&P sectors were lower Thursday, after disappointing data on both existing home sales and factory activity from the Philadelphia Federal Reserve Bank. Investors had already been rattled earlier in the day by a report showing weekly jobless claims and consumer prices rising more than expected.
Goldberg noted that even as investors focus on nimbleness in the short term, US Bancorp, Wells Fargo and JPMorgan “capitalized on the last cycle and will capitalize going forward,” he said.
With higher capital ratios and deposits, and "very" liquid balance sheets, they’re better prepared this time around, he said.
“Loan losses have declined now for several straight quarters,” said Goldberg. “Loan-loss reserves are now triple to what they where three years ago.”
Goldberg said that bank representatives have mentioned in recent talks that low interest rates are “causing a bit more of a challenge than maybe some thought a month or so ago,” and that loan volumes have been “sluggish.”
But from the latest 10-Q filings with the Securities and Exchange Commission, he said, it is apparent that “companies continue to buy back stock, at least those that are in position to in July. Some of them may think this decline is overdone.”
Even though low interest rates are a “challenge,” the silver lining is the “very strong mortgage refinance activity” going on as the rates improve home affordability, said Goldberg.
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Disclosure information was not available for Jason Goldberg.