US bank stocks predicted to rise 20 per cent

26 March 2008

Bank and brokerage stocks in the United States are forecast to soar by as much as 20 per cent over the next year, as concerns over the recent credit crunch ease and earnings increase.

According to Barron's, shares in US banks and brokerages will rise between ten and 20 per cent over the coming 12 months, though negative headlines will remain a feature of the market.

Following the collapse of US bank Bear Stearns, weaker banks could continue to require cash to bail them out or go bust over the next year, as the economy continues to experience recession, Barron's predicts.

Lower earnings, soaring energy costs, increased loan defaulting, share price falls, economic slowdown and a range of other factors are affecting the strength of banks' finances, according to Reuters.

Banks and brokerages overall are expected to see steady but sluggish growth in 2008, with a large gap between the yield on the two and ten-year US Treasury notes improving their fortunes.

Bear Stearns (BSC) sold to rival JPMorgan Chase on March 16th at a rock bottom price of $2 per share, but economists now believe that the bid could be increased, based on BSC's worth.

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development