Consistent earnings performance over the past several quarters and supportive macroeconomic elements are convincing enough to assume that U.S. banks are about to reach the trajectory of consistent growth. While U.S. bank stocks have climbed significantly since bottoming out during the last financial crisis on the back of an impressive financial performance, the industry’s success trail hasn’t been consistent due to the nonstop cropping up of issues. 

Banks are not expected to be relieved of issues going forward either. Along with the ramifications of past wrongdoings, a host of new issues — cybercrime, regulatory compliance and unconventional competition, to name a few — have been denting the financials and will continue doing so. But a sharper focus on reducing needless expenses by reorganizing business and an increased focus on revenues to boost the bottom line are gradually making the growth path steadier.

Further, the benefit from reserve releases is gradually fading away with the significant run down of reserves for the majority of banks. So banks’ core earnings power is better reflected in their recent results. Banks had to resort to reserve releases in the last several years in order to offset the effects of weak demand and an ultra-low interest rate environment.