Economics of U.S. Bank Performance and Industry Investment Allocations

2010 Banking Performance by Business Segments

Revisiting previous analysis regarding U.S. Banking performance, this update attempts to identify the successful business segments of banking activity. Other presentations reflected the levels of assets accumulated within the banks and profitability [ROA] performance. Using the business segmentation comparison provides more insight into the areas of business investment. Not all annual reporting uses directly comparable terminology for their business segments so, the placement of revenues and profitability may slightly vary. However, a clear idea of bank performance is still evident as Investment Banking (equity underwriting and valuations, M&A); Investing and Lending (trading activities); and Corporate & Consumer Commercial Banking. Included as a result of the analysis are the areas of competing strategic interests and  the profitability of Wealth Management and Global Card Services.

Global Economy and Competitive Development [Growth Scenarios]

I am currently using the World Economy Comparison presentations as foundation to model various growth scenarios. The analysis variables are by country / region using economic growth and population growth estimates over a 10-year timeframe. The most likely analysis estimation with the greatest variance to experience is the global rate of population growth. The analysis presumption is that greater economic activity will reduce the rate of population growth which also means an estimated increase in global economic participation. 

This was not planned to be a forecast of the global economic future. However, it was prepared to give perspective on the impact of economic growth relationships and international economic alliances.

Comparative Incentives and Interests: Government and Business

Updated with commentary: Although not specifically stated, Development encompasses international economic commerce of manufactured goods and services' markets and diplomatic relationships. Generally seen as an ongoing, implied responsibility. Government institutions refer primarily to the regulatory-legislative, judicial-legal, and education systems. Skill employment includes both skilled and non-skilled defined labor. The technical reference is recognition of a company's employment objective(s).

Reasons for strong central government, regulatory organizational structure, and inequality economic focus measurements for better distributive balance.

Business Industry and Profitability

I was recently thinking through the relationships of business, industry, and profitability compared to the general outline used in my blog themes. So, I attempted to categorize a sample of businesses using the Basic Summary of the Business Process to obtain a "rough" measure of corresponding operating profitability. Many arguments can be made for some of the companies in the reflected categories relative to their business and industry contributions. Generalizations on functional identity had to be made and their respective traditional structure definition difficulty "game changing" contributions show in the comparative operating margins. The innovative, integrated nature of many of these companies means that operations encompass more than one of the basic categories and industries.

What becomes very apparent is the impact on profitable return compared to control/ownership of resources: Natural Resources, Intellectual Content, Distribution and Allocation Methods. Although not completely reflected in this summary analysis due to multiple factors including timing is the housing "bubble" impact on industry. Lumber, homebuilders, and realtor businesses are operating at best, break-even. The financial industry which distributed the funds financing the "bubble" seems to have absorbed the industry risk and continue to remain profitable due to their infrastructure role in the US economy [Just a thought!]. Operating margin data used is the latest available reported annual earnings where available (FY2010).