It will be hard to ignore the US banking sector over the coming week as the sector reports quarterly earnings, and it kicked off on Friday with results from JPMorgan Chase, Citigroup and Wells Fargo.
Rising share prices in the past few months have underlined the confidence investors have in the sector, and its ability to generate returns.
"Financials" has been the best performing of the 10 industry sectors on the S&P 500 over the last three months, climbing nearly 10%.
Over the longer term, the financial sector has also outperformed all others over the last five years, with a cumulative climb of 110%.
What financial crisis?
It’s almost like the financial crisis never happened. Indeed, Donald Trump is moving forward with plans to relax banking regulations – what the President calls "a major haircut".
Banking executives love it. Jamie Dimon, chairman and chief executive of JPMorgan Chase welcomed Trump's efforts in his annual letter to shareholders in April.
He wrote: "Regulations must be flexible enough to allow banks to act as a bulwark against [financial crises], rather than forcing them into a defensive crouch that will only make things worse."
US banks have been doing all they can to encourage investors. Capital returns in the form of higher dividends and share buybacks have been common since regulatory stress tests gave banks the all-clear.
JPMorgan Chase, which was the first bank to report second-quarter earnings on Friday, has said it will buy back nearly $20bn worth of stock and is to raise its dividend to 56 cents a share from 50 cents.
Citigroup and Wells Fargo, also reporting on Friday, announced buybacks this year of $19bn each.
Investors have been quick to respond, expecting bumper returns during this earnings season.
Data from State Street show the Financial Select Sector SPDR Fund, which tracks the financials sector on the S&P 500, has seen net inflows of more than $660m in the past seven trading days. Year to date inflows are nearly $1.5bn.
Since the start of the year the Financial Select ETF has returned nearly 8%.
What are the numbers?
Starting with JPMorgan Chase, the Wall Street stalwart reported record quarterly net income and earnings per share (EPS) of $1.82, bettering analyst forecasts of $1.59 by some margin.
Revenues in the second quarter also beat estimates, coming in at $26.4bn, up from $35.2bn in the same quarter last year.
Although the bank's fixed income revenue fell 19% from last year, most banks are likely to see a similar trend as bond yields fall, inflows weaken and credit spreads tighten.
Citigroup also beat analysts' expectations in both revenue and earnings in the second quarter. Revenues rose 2% from a year ago to $17.9bn, while earnings per share were 3% higher at $1.28 a share.
Its fixed income trading revenue although lower, managed to outperform that of JPMorgan, falling only 6%.
Wells Fargo was the third major Wall Street institution to report on Friday and recorded its first rise in profit in seven quarters.
Revenues were broadly flat at $22.2bn, but earnings rose 5% to $1.07 a share.
In pre-market trade, all three shares were lower. Some of it disappointment in some of the detail, the bulk of it likely profit taking as investors look to book some returns ahead of another push higher.
Let's face it, with dividends increasing and share buybacks looming, who's going to make a wholesale disposal of banking shares?
The banks have reported optimistic outlooks, and given the share price rises in the last three months, they will have to make good on their forecasts.
Any sign of weakness from any of the majors over the coming week, could bode badly for the whole sector – particularly given some of points of stress in today's earnings. Weak fixed income trading in particular could start to look like a trend.
But investors continue to warm to the sector. Many US bank share prices now stand above their pre-crisis levels – indeed JPMorgan and Wells Fargo are close to records.
And in the current environment of rising US interest rates bond yields should start to move higher and profitability for banks should increase.