Now interest rates are rising and the money should be rolling in. But the story isn't playing out like the bank executives said it would, and investors are taking notice. The banks don't seem to be getting the benefit from higher interest rates that investors once imagined they would. Yes, interest income rose more than 10 percent in the quarter for JPMorgan and Citigroup, but interest expenses were up in the 50 percent range.

Investors can point to three reasons for disappointment. The first is loan growth, or rather the lack of it. Low unemployment and a continued rising economy and stock market, especially in an expansion as long as this one, should produce a surge of lending. The tax cut was supposed to amplify that jump. Instead, lending at the largest bank, JPMorgan, rose just 0.2 percent in the first quarter from the previous three months. Wells Fargo's loans dropped by 1 percent, though some of that can be attributed to the bank's particular problems. Citigroup's lending was up 1 percent, but that stemmed largely from a push to expand its credit card business, which hasn't been going so well. In the first quarter, the bank had to increase its provision for losses in it retail-branded cards by 16 percent. Yes, analysts were predicting that lending would be relatively weak, but it was even weaker than many forecast.

Eoin Treacy's view

The banking sector is a liquidity provider and tends to do well in a bull market because demand for liquidity increases. However, it was also the epicentre of risk in the last crisis so the liquidity provision function has been impaired during this recovery not least because wages have not kept pace with asset prices.

The S&P500 Banks Index is now testing the region of the trend mean and will need to continue to steady in this area if medium-term scope for continued higher to lateral ranging is to be given the benefit of the doubt.

The Index has been performing more or less in line with the wider market since 2009 but would need to sustain a breakout to suggest a return to outperformance is a credible expectation.