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Even though the near-zero interest-rate environment remains unchanged amid concerns over the pace of economic recovery, most banking stocks have rebounded this year, with rising financial transactions and capital market activities driving the non-interest component of their revenues. Moreover, the Federal Reserve said it could soon slow its large-scale purchases of government-backed bonds and indicated it might raise interest rates in 2022, which should help financial companies increase their interest income. According to Globe Newswire, the global financial services market is expected to grow at a CAGR of 9.9% and hit $22.5 trillion this year. As a result, both USB and JPM should benefit.
USB has gained 15% over the past nine months, while JPM has returned 10%. However, JPM’s 32.7% gain over the past year is higher than USB’s 28.7% return. Moreover, JPM is the clear winner with 27.4% gain versus USB’s 23.4% return in terms of year-to-date performance.
