WSJ Summary: What the U.S. Tax Law Will Do to Bank Earnings
January 10 2018 - 11:44AM
Dow Jones News
--Five of the biggest U.S. banks are likely to report a total of
about $31 billion in charges relating to the new U.S. tax code in
their fourth-quarter results, though they should benefit from the
new law in the long term. The banks are Bank of America, Citigroup,
Goldman Sachs, JPMorgan Chase, and Morgan Stanley.
--Most of the charges stem from a reduction in the value of
deferred tax assets, and a one-time tax of 15.5% on foreign-held
liquid assets like cash, and 8% on illiquid assets.
--Deferred tax assets refer to past credits and deductions that
companies can retain and use against future tax bills. However,
when tax rates decline, these credits lose value and must be
written down, which can cut into a bank's book value.
--Accounting laws require companies to reflect the new law's
impact this quarter, but by 2019 large national and regional banks
should see an average 15% boost in their earnings per share,
according to Bernstein.
This is a summary of an article that was published on Dow Jones
Newswires on Wednesday at 1030 GMT and is also available at
http://on.wsj.com/2mmPJQj.
Write to Barcelona editors at barcelonaeditors@dowjones.com
(END) Dow Jones Newswires
January 10, 2018 11:29 ET (16:29 GMT)
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