The banking sector has gone through lots of challenges recently. With changes in federal rules and regulations, many banks are finding it difficult to sustain in the stock market. Looking at the history of recent performances, capacity to grow in the past and strength of financials, the following banks are considered to be the best in the industry right now. These banks are trading at very attractive rates; hence this is a great opportunity for investors to get great returns on affordable investments.
Using its position to choose clients
Though the banking sector is looking dull overall, experts recommend one bank stock to add value to your portfolio — JP Morgan Chase (JPM, Financial). This is one stock that has stood tall all of its peers bit the dust. After a tough 2014, JP Morgan corrected most of its initiatives during the last quarter of 2014. Investments from clients saw an increase by 13%, deposits grew by 3%, loans increased by 8% and non-interest expenses came down by 1% when compared with values of the same quarter of last year.
The year 2015 has started off on a positive note. For the month of February alone, share prices saw an increase of 13%. The Federal Reserve, in the soon-to be released stress test, is due to announce JP Morgan as one of the strongest banks in its sector. Recently, the authorising body also concluded that the bank’s financials were strong enough to pay out dividends to shareholders, boosting its image among investors and stakeholders. JP Morgan is already on the path of progress as it involved in a series of initiatives to cut costs, improve efficiency and increase value to shareholders. Last month, the bank announced that the big clients would have to pay to maintain deposits with it. Also, going forward, the bank would exercise stricter control while choosing its borrowers, so that it could make use of the opportunities that are available in the international arena right now. Share prices have still not started to reflect these positive moves as they are currently available at low rates as seen from the trend below:
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Efficient asset management
Wall Street experts are of the view that Citigroup (C, Financial) is a bank that holds good promise for the future. The presence of this bank in this list could surprise many investors; however, there are many reasons as to why Citigroup is a stock that should be bought now. First and foremost, the share prices are quite low and have not yet started to reflect the turnaround activities that the bank is involved in right now. One of the notable achievements of Citigroup is its effort to get away with legacy assets – those that are not profitable and are nothing but a burden to maintain.
Capital levels and leverage ratios are standing at in impressive 11.4% and 6% respectively, up from their previous levels of 10.7% and 5.4%. With these improved financials, experts are of the opinion that Citigroup investors will be treated to the good news of dividend increases anytime now. With the quality of assets improving and with dividends expected to be increased in the near future, Citigroup shares are all set to increase. Hence the current share prices at which the bank is trading at, present great opportunities for investors to take stock in the company right now. The share price trend for the last few months is seen below:
Conclusion
If you are looking for stability of investment and want to invest in some good banking stocks, the above stocks are the best bets for you. Since these are trading at low prices, they present perfect opportunities for investors. This is the best moment to buy these shares, as the prices are likely to soar in the near future, thanks to some high quality priority-setting initiatives and strategies of these banks.
