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Bank lending: Against mixed results, US banks grow lending

Large US banks see demand for credit; Economy still dependent on low rates and fiscal largesse

Large US banks reporting fourth-quarter and full-year 2010 earnings last month revealed widely divergent fortunes.

JPMorgan took star billing, with solid revenues across its divisions, including from client business in investment banking. Rivals, notably Goldman Sachs, reported marked fall-offs in client activity. JPMorgan also boosted its numbers with releases from credit reserves on cards and record revenues in commercial banking.

Wells Fargo enjoyed record quarterly and annual results as strong revenues across many of its 80-odd businesses, declining credit costs and market share gains from the Wachovia acquisition fed through.

Notable underperformers included Citi, where revenues and earnings were hit by weak trading in fixed income and equity, as well as by higher than expected legal expenses. Accounting required it to take losses arising from improvements in its own credit spreads, as the US Treasury sold down its remaining stakes in the bank: a milestone in management’s efforts to stabilize the business and stand it back on its own feet.

Bank of America was another that disappointed, after taking a $3 billion hit to settle demands from Fannie Mae and Freddie Mac that it repurchase faulty mortgages sold by its Countrywide unit.

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