News about the broader economy is hanging over the heads of banking stocks today. Luckily, the latest and greatest is generally positive. The market, overall, has been cheered by the Commerce Department's fresh estimate for Q2 2013 real GDP growth. In the second of its customary three projections, Commerce has pegged quarter-over-quarter improvement for the period at 2.5%, significantly higher than estimate No. 1 of 1.7%. The new figure is also higher than the 2.2% predicted by a Bloomberg survey of 79 economists.
The nation's big banks can take some credit for this improvement. Federal Deposit Insurance Corp. data released this morning indicated that the banking sector, as a whole, saw its most profitable quarter in history this past Q2. Collectively, the industry earned in excess of $42 billion during the quarter, an impressive 23% gain over Q2 2012's figure. This was due. in no small part. to the record quarterly earnings reaped by JPMorgan Chase (NYSE:JPM) and Wells Fargo. The two behemoths netted $6.5 billion and $5.6 billion, respectively, during the quarter.
That happy trend seems to have spread north of the U.S. border, too. Royal Bank of Canada (NYSE:RY) today posted quarterly results that showed a record C$2.3 billion ($2.2 billion) in quarterly net income. Meanwhile, that institution and its peers, Bank of Nova Scotia and Toronto-Dominion Bank, all raised their key quarterly dividends.
So, all in all, the banking world is a good place today, with the sector's famous stocks generally keeping pace with, or outrunning, the Dow.
This has all happened despite some less-than-stellar news on the legal front. Morgan, which apparently has a SUE ME sign painted in big letters on its back, is coming under increased scrutiny over its hiring practices in Asia. The Justice Department has waded into a Securities and Exchange Commission probe into whether the bank employed people well-connected to government and other important figures, in possible violation of bribery laws. Morgan has apparently opened an internal investigation into the matter; if so, it looks like it'll have plenty of help from various Federal agencies.
On a smaller scale, Bank of America's (NYSE:BAC) Merrill Lynch has agreed to fork over $160 million to settle a nearly decade-old class action discrimination lawsuit, according to an attorney for the plaintiffs. In 2005, a group of African-American brokers filed the suit, alleging a pattern of discrimination that resulted in their having lower production numbers than their Caucasian colleagues. Around 1,200 plaintiffs will receive a share of that award.
For the most part, though, the market's generally bullish. All in all, today's a good day to be a stockholder, particularly if that stock bears the name of a major banking group.
Fool contributor Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Bank of America, The Bank of Nova Scotia, and Wells Fargo. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.