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Unloved U.S. financials rewarding the faithful

U.S. bank profits are racing past analysts’ expectations but the sector still looks cheap. As financial institutions slowly emerge from the cloud of skepticism that has hovered over them ever since the financial crisis of 2008, investors may want to consider climbing aboard.

All 18 constituents of the S&P bank index have reported quarterly earnings in recent weeks and the results have been spectacular. Earnings per share for the sector were 81 per cent higher in year-over-year terms and 12 per cent ahead of analyst projections.