One could be excused for getting confused reading all the material about banks’ earnings reports.  On the one hand, earnings are up (hooray, says the banker, thinking about his bonus, and the shareholder, anticipating a dividend).  On the other hand, revenues are continuing to be stubborn.  All told, banking industry revenues are expected to rise to about $70B in 2010, with about $20b coming from the release of lass reserves (according to Foresight Analytics).  Jamie Dimon, everyone’s hero, was quick to call himself out on this, “We do not look at reserve releases as earnings….Let’s not pretend the company is trying to pull the wool over anyone’s eyes with reserve releases.”

Revenues across the industry are down about 1%, to about $790B.  Bankers are of course wrestling with the impact of all the new regulations, hemming in their credit card and other lending product revenues.  They will surely pass these along to customers (see my earlier post on this), but the securities business is also under pressure.   Citi announced earnings yesterday, and revenues were down due to weaker performance in its investment banking and trading businesses.  Wells Fargo and BofA announce their earnings before this week is over.

Bright spots?  sure!  defaults and bad loans are down.  Better decision-making by bankers is leading to better risk management in the loan business, and will eventually lead to fewer foreclosures.  But the US housing market (to pick on one ares of softness) will need at least another year to recover.  And even more worrisome is the european sovereign risk issues…..but I digress…