Investors are accepting the smallest yield premiums on bank bonds relative to industrial companies in a year as earnings surpass estimates at lenders from Bank of America Corp. to Citigroup Inc.

Relative yields on U.S. financial debt have dropped to 73 basis points more than those of industrial companies in the U.S., from 105 basis points at the start of June and the least since Aug. 2, Bank of America Merrill Lynch index data show. The bonds are on pace to produce the best monthly returns since January, gaining 2 percent through yesterday.

Early readings of second-quarter bank earnings are providing comfort that financial companies worldwide are withstanding Europe's sovereign debt crisis after spending four years shoring up balance sheets and almost doubling capital cushions that protect lenders from losses. In Europe, the gap between yields on financial institutions and other companies narrowed to an 11-month low of 108 basis points on June 30.