Banks raise earnings expectations

JPMORGAN STARTED IT at the very end of February. Mike Cavanagh, chief financial officer, told analysts that results for the first two months of the year had been "solidly profitable", and roughly in line with his audience’s forecasts, which are for $40 billion in pre-provision pre-tax profit for the year.

It would, however, be preposterous to pretend that credit costs won’t eat into this.

Not to be outdone, Vikram Pandit took up the cheerleading last month, first touting Citi’s position as the strongest capitalized large US bank, with tangible common equity of up to $81 billion. Tangible common equity was a measure the bank used to dismiss back in the days when leading analyst Meredith Whitney was pointing out how its ratio had been dangerously eroded by the acquisition of risk assets.

Now, following an exchange of preferred stock into common equity matched by...