Analysts forecast 57% jump in US bank earnings including Bank of America

NEW YORK: Analysts' failure to foresee declining earnings per share for the biggest US banks last year hasn't stopped them from predicting an even bigger profit surge for 2012.

The six largest lenders, including JPMorgan Chase & Co (JPM), Bank of America Corp (BAC) and Goldman Sachs Group Inc (GS), may post an average profit increase of 57% this year, according to 184 analysts' estimates compiled by Bloomberg.

A year ago, analysts predicted profit at the banks would climb 32% in 2011. Instead, earnings per share probably fell 18% as the economic recovery analysts counted on never took hold.

Improved trading results, more investment-banking deals, expense-cutting measures and lower credit costs will lead to the increase in earnings that didn't materialise last year, analysts say. That may provide a boost to stock prices after financials were the worst-performing industry in the US in 2011.

"The banks could get some positive operating leverage in 2012 from trading normalising and expenses normalising," said Chris Kotowski, an Oppenheimer & Co analyst in New York who estimates at least an 18% earnings-per-share increase for each of the six banks.