Bank stocks and financial-related exchange traded funds are beginning to pick up steam, with increased loan sales and trading income lifting year-over-year revenue growth to a five-year high.
Over the past month, the Financial Select Sector SPDR (NYSEArca: XLF), which includes a 36.2% tilt toward the banks sub-sector, was up 5.5%. Meanwhile, the SPDR S&P Regional Banking ETF (NYSEArca: KRE) increased 7.0% and the SPDR S&P Bank ETF (NYSEArca: KBE) rose 7.3% over the past month.
The banking sectors were also outperforming Tuesday, with KRE and KBE both up about 0.2%. In comparison, XLF was down 0.1% while the S&P 500 index was 0.1% higher.
Bank stocks strengthened after the Federal Deposit Insurance Corporation revealed that U.S. banks posted profits of $38.7 billion in the third quarter, compared to $36.1 billion for the same period last year, reports Jesse Hamilton for Bloomberg.
“Net income was up, revenue growth was relatively strong and broad-based, asset quality improved and loan balances grew,” FDIC Chairman Martin Gruenberg said in the Bloomberg article.
“Community banks, in particular, performed better than a year ago.,” Gruenberg said, according to StarTribune. “Third quarter results were largely good news for community banks and for the entire banking industry.”
The First Trust NASDAQ ABA Community Bank Index Fund (NasdaqGM: QABA) was up 0.1% Tuesday and increased 6.7% over the past month.