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A New Look at Moat Ratings of 4 Banks

Industry changes can affect moats and more.

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Eric Compton: After an extensive review of the competitive positioning of the big four U.S. money center banks, we have upgraded the moat ratings of JPMorgan and Bank of America to wide, while maintaining the moat rating of Wells Fargo at wide and Citigroup at narrow.

Our upgrades are based on a stronger U.S. banking system as well the increasing importance of size and scale in the banking industry. We believe the U.S. banking system is much stronger than it was a decade ago, leaving more room for wide moats among the best-positioned banks. Capital levels present within the system are higher than ever, and regulatory reform has reduced or eliminated many of the riskier activities within the money center banks.

Eric Compton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.