JPMorgan Chase & Co.(JPM), Wells Fargo & Co (WFC): How Will Banks Be Affected by a QE Slowdown?

Another important point is its balanced revenue mix with 51% of its revenue being generated by non interest income and the rest with net interest income with a fee income over average assets in 3.1%, well above JPMorgan Chase & Co.(NYSE:JPM)’s 2.5% and Bank of America Corp (NYSE:BAC)’s 2.3%. Wells Fargo & Co (NYSE:WFC) is an excellent choice for risk averse investors.

Bottom line

All of these banks are good choices for investors. Bank of America Corp (NYSE:BAC) has achieved a healthy balance sheet by mitigating risks and reducing costs which will help it achieve stable growth in the coming years: It has increased its brokerage income, is recording higher investment banking fees (it is #2 in global investment bank fees,) and improved credit quality across all major portfolios.

JPMorgan Chase & Co.(NYSE:JPM) is indeed one of the leaders in the banking industry. It has a diverse product range and geographical diversification that allows the bank to be a safe bet for prospective investors. This means that if it loses deposits, it will still be able to generate profits from other revenue streams: It is #1 in global fees. All of these reasons make JPMorgan Chase & Co.(NYSE:JPM) attractive for investors that want exposure to the US financial sector.

Finally, Wells Fargo & Co (NYSE:WFC) is a jewel in the segment. It is a leading financial firm in the small lending business, deposits, mortgages, and in commercial loans. This scale, combined with an excellent management team, will likely yield better growth prospects than most of its peers. It will also withstand a rate hike as it has a balanced revenue mix, with more than half of its profits being generated by non-interest income assets. These are some reasons that explain why Wells Fargo & Co (NYSE:WFC) accounts for such a large part of Berkshire Hathaway’s equity portfolio, and should be considered for yours as well.

The article How Will Banks Be Affected by a QE Slowdown? originally appeared on Fool.com and is written by Vanina Egea.

Vanina Egea has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, JPMorgan Chase & Co (NYSE:JPM)., and Wells Fargo. Vanina is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.