Oct. 17 (Bloomberg) -- Financial industry stocks look cheap after a “difficult quarter” and a sell-off that wiped out trillions in global equity in August, according to JPMorgan Chase & Co.’s David Kelly.
U.S. banks are growing healthier as they have pursued conservative lending to reduce delinquency rates in the aftermath of the 2008 credit crisis, said Kelly, who helps oversee $408 billion as chief market strategist for JPMorgan Funds in New York.
“It is quite possible we did better than 3 percent growth in the third quarter. That is clearly not recession,” Kelly said, referring to the U.S. economy, in an interview on Bloomberg Television’s “In the Loop” with Betty Liu today. “Unless you are assuming Armageddon next year, financials as a sector looks pretty cheap.”
The Standard & Poor’s 500 Financials Index has fallen 23 percent this year as European leaders struggle to contain the region’s sovereign debt crisis. That’s the worst performance among 10 groups in the S&P 500. The price-to-earnings ratio fell to 10.9 as of Oct. 14, below its 10-year average of 16.9, according to data compiled by Bloomberg.
The KBW Bank Index slipped 2.7 percent as of 12:30 p.m. New York time. JPMorgan, the first U.S. bank to announce third- quarter results, has fallen 6 percent since it reported on Oct. 13 that profit fell on a slump in investment banking and trading. Wells Fargo & Co., the largest U.S. home lender, lost 6.8 today after its quarterly revenue dropped and margins narrowed. Citigroup Inc. declined 0.9 percent after its profit rose 74 percent, beating analysts’ estimates.
--Editors: Jeff Sutherland, Stephen Kleege
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