Things are finally looking up for megabanks.
After five years of being out of the top 10 ranking, JPMorgan Chase & Co. recently passed Procter & Gamble Co. and Wal-Mart Stores Inc. to claim its title as the 10th biggest U.S. company by market capitalization. Berkshire Hathaway Inc. clocks in at number four and Wells Fargo & Co. at number six. Because of the crippling financial crisis six years ago, financial stocks have not held this many top 10 spots in nine years.
“This odyssey represents a degree of normalization that has returned to the financial sector. It also represents to some degree the faith that investors have that banks are an attractive investment going forward,” according to Jeff Korzenik, Fifth Third Bancorp. chief investment strategist.
Banks made up 22%, the largest sector, of Standard & Poor’s 500 Index back in 2006. They currently stand at 16.8%, behind technology. Earnings for the industry are expected to grow 5.7% this year and 1% for the overall S&P 500, according to analyst estimates compiled by Bloomberg.
Growth of the largest financial firms has been facilitated with the help of acquisitions. JPMorgan, for one, took over Bear Stearns Cos. and Washington Mutual Inc.’s bank units, aiding the company’s climb back to its top 10 status.