In general, banks are in a good position to initiate share repurchase programs. Buybacks give banks a better known revenue stream as they repurchase part of a known lending portfolio as well as a portion of the fee revenues, which are less risky than lending revenues. Also, banks are better capitalized now, and are trading for less than their price-to-book ratios, reports Everyday Finance on Seeking Alpha. [Some of S&P’s Favorite Equity ETFs]
Another banking ETF to consider is the PowerShares KBW Bank Portfolio ETF (NYSEArca: KBWB) which has returned 35% over a one year basis. Despite a slow recovery in the U.S. and abroad, banking stocks are cheap and this is a solid signal that downside risk is low. KBWB is affordable at 0.35% and exposure to 24 regional banks. Also, KBWB avoids some of the mega banks, which makes it a safer play in for the long term.
PowerShares KBW Regional Banking ETF
Tisha Guerrero contributed to this article.