NEW YORK — You can usually tell a lot about the health of the U.S. economy by looking at the financial results of banks. They’re the ones that finance new factories, plant expansions and fatter payrolls.
But don’t count on that over the next two weeks, when banks report their results from the last three months of the 2011.
Americans ran up credit-card balances, businesses borrowed more, and historically low mortgage rates encouraged people to refinance mortgages. All good for the economy, and for banks too.
But banks took a hit because Europe’s debt crisis made stock and bond markets jumpy.
A rule restricting debit-card fees that took effect Oct. 1 will take another bite out of revenue, as will an obscure accounting rule that requires banks to take a loss when the value of their debt rises.
JPMorgan Chase will be the first major bank to report results Friday, followed by Citi group, Wells Fargo, Goldman Sachs, Bank of America and Morgan Stanley next week. Wells Fargo, the only major commercial bank without a large investment banking division, is expected to come out ahead of its peers Citi and JPMorgan.
On Monday, the 19 largest U.S. banks submitted to their annual stress test, with results due in March. The Federal Reserve will determine whether they have enough cash and cash-like securities on their balance sheets to offset potential losses from risky loans.
