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By Jeremy Glaser | 04-16-2010 12:25 PM

Are Big Bank Earnings Sustainable?

Investment banking and declining delinquencies helped power strong results for J.P. Morgan and B of A, but uncertainty in the housing market and broader economy still loom, says Morningstar's Jaime Peters.

Jeremy Glaser: I'm Jeremy Glaser with Morningstar.com. With J.P. Morgan and Bank of America kicking off big bank earnings this week, I'm here with senior bank analyst Jamie Peters to talk about the results and to see what the future might hold for these companies.

Jamie, thank you for joining me today.

Jamie Peters: Good morning.

Glaser: One of the things that struck me about these earnings releases is that the investment bank results really seem to be driving earnings. Is this something that you've seen over the past couple quarters or something that you think is sustainable over the long run?

Peters: Well, investment banking results last year were actually quite exceptionally high because of widespread and favorable conditions in the fixed-income market. We had expected them to start to come back down, but what is happening is that there is such activity in fixed-income right now that the banks are still posting very, very good numbers.

First quarter is always a seasonably high quarter, so as a result we do expect returns to come down over the year, but they're still performing much better than we expected.

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