US bank stocks' longest losing streak since 2008 clashes with earnings picture

US bank stocks are suffering their longest losing streak since the 2008 financial crisis, despite some of the country's biggest lenders having so far reported another sturdy set of earnings.

Results from the four biggest lenders last week gave fresh evidence that their US consumer and business customers are holding up even in the face of sharply elevated borrowing costs.

JPMorgan Chase ( JPM ), Bank of America ( BAC ), Citigroup ( C ), and Wells Fargo ( WFC ) collectively set aside $7.6 billion in credit provisions during the quarter, down about 3% from a year earlier. Actual loan losses in the quarter between these same banks fell 5%, while lending grew nearly 10%.

Investors still appear unconvinced. The benchmark KBW Nasdaq Bank Index ( ^BKX ) fell slightly on Monday. It has sold off for the past six consecutive weeks, losing 11% since early September in its longest weekly losing streak since the 2008 financial crisis, according to Yahoo Finance data.

The sell-off comes as credit managers worldwide appear increasingly worried about what happens next.

A recent survey of credit portfolio managers at major banks and other global financial institutions found that about 60% expect corporate defaults to rise worldwide over the next 12 months, while 85% anticipate wider spreads on North American junk bonds over the next three months. The figure is sharply higher compared to the survey's second quarter reading of a 40% rise in corporate defaults over the next 12 months and 50% increase in North American junk bonds in the ensuing three months.

Credit portfolio managers "are seeing some risk appetite among investors, but they are also seeing a number of companies, which have so far managed to stay afloat, beginning to reach the end of the line," Som-lok Leung, executive director for the International Association of Credit Portfolio Managers, said in an emailed statement.

Morgan Stanley analysts said in a Monday note to clients that bank credit conditions remain largely "benign," apart from isolated commercial weakness, although executives have sounded generally more cautious on earnings calls so far this month than in the second quarter.

Investor worries center on whether persistently higher interest rates will eventually squeeze borrowers. By the same logic, declining interest rates have "the potential to engineer a bounce" in bank stocks, Bank of America analyst Ebrahim Poonawala wrote Monday.

"Ideally, that occurs on the back of lower energy prices or easing inflation," Poonawala added.