Wed, May 25, 9:25 AM
Fri, May 20, 9:18 AM
- U.S. credit card balances are on track to climb over $1T this year, closing in on the all-time high of $1.02T set just before things fell completely apart in 2008.
- Slow, but steady economic growth, an improving job market, and lenders returning to offering credit to millions of subprime consumers are behind the numbers.
- Lenders will take it where they can get it, as credit cards are one of the few areas working for banks right now, thanks to low margins on ordinary lending and a secular decline in trading profits. For now, delinquency rates are low, and profits are set to rise even more alongside Fed rate hikes.
- Capital One's (NYSE:COF) strategy to boost card usage by raising spending limits and giving out new cards is paying off: The bank's customers spent 20% more on cards in Q1 this year than last. For Citigroup (NYSE:C), average balances posted their first Y/Y increase since 2008. Balances grew at Discover (NYSE:DFS) and JPMorgan (NYSE:JPM) as well.
- Even American Express (NYSE:AXP), whose customers typically pay it all off every month, is now focusing on lending to those who will keep a balance.
- Source: The WSJ's Annamaria Andriotis and Robin Sidel
Wed, May 18, 1:08 PM
- The meme of rates lower for longer has been stood on its head in the last 24 hours thanks to some decent economic data, but also surprisingly hawkish Fedspeak yesterday.
- The fixed-income world now believes remarks from the Fed's Williams and Lockhart yesterday may have been a preview of what we'll get when the real power speaks tomorrow - Fischer and Dudley - and then on May 27, when Janet Yellen gives a speech.
- Up at 2 ET are the minutes from the FOMC's April meeting.
- The 10-year yield is higher by five basis points to 1.82% and short-term rate markets have upped expectations for a Fed move this year.
- XLF +1.85%, KBE +3.15%, KRE +3.3%
- Bank of America (BAC +3.7%), Citigroup (C +4.2%), JPMorgan (JPM +3.2%), Wells Fargo (WFC +2.1%), U.S. Bancorp (USB +2.1%), Regions (RF +3.3%), KeyCorp (KEY +3.7%), PNC Financial (PNC +2.7%), Fifth Third (FITB +3.7%), Capital One (COF +1.9%), E*Trade (ETFC +4.4%), Schwab (SCHW +4.8%), MetLife (MET +2.9%), Prudential (PRU +3.4%), Lincoln National (LNC +4.2%), BNY Mellon (BK +2.3%), Northern Trust (NTRS +2.9%)
Mon, May 16, 12:10 PM
- Leon Cooperman's Omega Advisors sold its roughly 3M share stake in Citigroup (NYSE:C) in Q1, which had accounted for about 3.4% of the fund's holdings.
- He took new stakes in PayPal Holdings (NASDAQ:PYPL), UnitedHealth (NYSE:UNH), Coach (NYSE:COH), Lowe's (NYSE:LOW), Autozone (NYSE:AZO), and Electronic Arts (NASDAQ:EA).
- Cooperman also cut his FANG exposure, selling more than 50% of his Facebook (NASDAQ:FB), and about one-third of his Google (GOOG, GOOGL).
- While the 13F also shows a new 227K share stake in Apple (representing 0.7% of the total portfolio), CNBC reports that holding has since been sold.
Mon, May 16, 11:07 AM
- The bank sold high-frequency trading business Automated Trading Desk (ATD) to Citadel for undisclosed terms. Citi (NYSE:C) purchased the operation in 2007 for about $680M.
- Banks used to be the dominant players in the wholesale market-making business, but Citi has joined Goldman, BofA, Credit Suisse, and Wells Fargo in exiting, in part, thanks to plenty of regulatory pressure.
- "Banks just can’t compete,” says Citadel's Jamil Nazarali. “Competitive pressure has been strong over the past few years.”
Thu, May 12, 12:33 PM
- Value-at-risk at JPMorgan (NYSE:JPM) jumped 50% amid Q1's volatility, reports Bloomberg. It's a figure standing in sharp contrast to declines of 25% or more at Bank of America (NYSE:BAC), Citigroup (NYSE:C), and Deutshce Bank (NYSE:DB), and smaller falls at UBS, Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS).
- For Bank of America, it says the risk in its trading portfolio in Q1 was the lowest in any quarter since the Merrill Lynch merger in 2009.
- While cutting VaR reduces risk, it also limits profits, and in past times. notes a former Fed bank examiner turned college teacher, banks used episodes of higher volatility to step in and make money. In a Dodd-Frank world, making money in this fashion may not be received well by regulators.
Wed, May 4, 2:49 AM
- Seven of the world's largest banks have agreed to pay $324M to settle a U.S. lawsuit accusing them of rigging the "ISDAfix" benchmark for their own gain from 2009 to 2012.
- The illegal deals included the execution of rapid trades just before the rate was set each day, called "banging the close," to delay transactions and post rates that did not reflect market activity.
- The settlement resolves claims against BofA (NYSE:BAC), Barclays (NYSE:BCS), Citigroup (NYSE:C), Credit Suisse (NYSE:CS), Deutsche Bank (NYSE:DB), JPMorgan (NYSE:JPM) and the Royal Bank of Scotland (NYSE:RBS).
Mon, May 2, 7:25 AM
- April monthly performance was: +2.64%
- 52-week performance vs. the S&P 500 is: -1%
- No dividends were paid in April
- Top 10 Holdings as of 12/31/2015: JPMorgan Chase & Co (JPM): 3.18%, Citigroup Inc (C): 3.13%, General Electric Co (GE): 2.46%, US Treasury Note 1.625%, Bank of America Corporation (BAC): 1.94%, Morgan Stanley (MS): 1.58%, US Treasury Note 2.25%, Carnival Corp (CCL): 1.29%, PNC Financial Services Group Inc (PNC): 1.26%, Citizens Financial Group Inc (CFG): 1.26%
Thu, Apr. 28, 7:56 AM
- The bank's Credit Card Merchant Acquiring business provides credit and debit card payment processing services to merchants in Asia, and has about $400M in gross revenue, reports Reuters.
- Its potential sale is part of Citi's (NYSE:C) ongoing process of exiting non-core businesses around the globe. The bank started exiting its merchants acquiring businesses in 2005, and Asia is the last remaining market where it still does this sort of work.
- According to the report, final bids are due in three weeks.
Tue, Apr. 26, 12:24 PM
- The bank plans to add about 1K people in Florida, says CEO Michael Corbat, speaking at the annual meeting near Miami. Citigroup (C +0.7%) currently has more than 10K employees in the state, with about 4.5K focused on customer service and risk modeling in Tampa, and 3.5K in Jacksonville also in consumer banking support.
- Noting the election season, and with it a lot of shots being taken at bankers and banking, Corbat has this to say: "Banking is the essential lifeblood of economic and social progress. It always has been, and always will be, in any free society." (via John Carney).
- Meeting webcast
Wed, Apr. 20, 2:44 PM
- With sharp declines in fixed-income revenue looking less cyclical and more secular with each passing quarter, banks like Citigroup (NYSE:C), UBS, and Deutshce Bank (NYSE:DB) are among those trying to grow their equities business.
- It sounds like a good idea, but with everyone diving into the same low-margin pool at the same time, that business is likely to come under pressure as well. The newcomers are also fighting against more established players like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS).
- "If everyone tries to grow equities, the economics aren't going to be that great," says analyst Guy Moszkowski. "It's also not going to be easy."
- Along with razor-thin margins, launching and growing an equities trading business takes a big up-front investment that could take years to bear fruit. Will investors already grappling with low ROEs stand for it?
- They may have to as it's where the money is. Data from research firm Coalition says while bond trading revenue fell 36% over the five years ended in 2015, stock-trading revenue grew 23%.
Tue, Apr. 19, 1:29 PM
- Having had some time to digest weak, but better-than-hoped Q1 results for the nation's largest lenders, Goldman analyst Richard Ramsden remains bullish on the likes of Bank of America (NYSE:BAC), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC).
- He notes NIMs expanded - meaning banks held onto most of the benefit from the Fed's December rate hike. Cost-cutting programs are beginning to bear fruit, with 9% Y/Y cuts in compensation costs, and 3% declines in non-comp expenses.
- As for energy, provisions made for a 9% drag on EPS, but reserves now stand at 6% of funded energy loans, or 11% of E&P oilfield service loans.
- Ramsden is looking for robust loan and deposit growth for the rest of this year.
- His favorite name is Bank of America with a $17 price target (vs. current $14.39). The stock trades at 10.5x 2016 earnings, but probably has the most sensitivity to higher rates, and the most core and non-core expense leverage.
Fri, Apr. 15, 12:06 PM
- Taking note of Citigroup's (C +0.8%) tangible book value per share of $62.58 against a stock price in the mid-$40s, and a capital ratio of 12.3%, CLSA's Mike Mayo advices bank management to "sell the furniture and buy back stock."
- The bank did return $1.5B of capital to shareholders in Q1, including the repurchase of 31M shares (vs. a float of nearly 3B shares). If the "living will" situation is any indicator - Citi was the only one of the large banks not to have its plan deemed unacceptable - Citi might have finally hit the sweet spot with its D.C. regulators and investors can look forward to an accepted CCAR plan this spring.
- Presentation slides
- More notes from the call: CFO John Gerspach says while March and April have been better than January and February, trading business can't yet be called "robust." He expects trading revenues in Q2 to be flat from Q1.
- The efficiency ratio went the wrong way - rising to 60% from 54% a year ago, as cost-cutting efforts were overpowered by revenue declines. Gerspach: “Obviously the performance metrics are not where we want them to be."
- "The outlook is still ripe with risks," says CEO Mike Corbat.
- Now read: Citigroup: Bad First Quarter Results But It Beat The Estimates (April 15)
Fri, Apr. 15, 11:09 AM
- "Citi (NYSE:C) is plenty cheap and management continues to make the company simpler, smaller, safer and stronger," says Evercore's Glenn Schorr. [It's] "a message that is likely to resonate with regulators and bring better capital returns over time."
- WSJ blog
- UBS: "These better than expected results, combined with Citi specific regulatory headwinds which seem to be fading (i.e. the positive living will outcome) should allow for sentiment around Citi shares to improve."
- Wells Fargo says positives included inline capital market performance, visible operating leverage improvement, and continued expansion of capital ratios. Energy was negative but expected.
- The banks are in the red today, but Citi is managing a 0.9% gain. The conference call is just getting underway. Presentation slides here.
- Now read: Citigroup: Bad First Quarter Results But It Beat The Estimates (April 15)
Fri, Apr. 15, 8:15 AM
- Q1 net income of $3.5B or $1.10 per share vs. just over $4.8B and $1.52 (ex. DVA) one year ago. Expectations were for just $1.03 this year. $1.6B of the DTA utilized.
- TBVPS of $62.58 up 9% Y/Y. CET1 ratio of 12.3% up 120 basis points.
- CEO Michael Corbat: "While our market-sensitive products clearly suffered from weak investor sentiment during the quarter, e continued to make progress in several key areas."
- Operating expenses of $10.5B in Q1 fell 3% from a year ago, thanks to Citi Holdings and legal charges, partly offset by repositioning costs.
- Loan loss allowance of $12.7B at quarter end, or 2.07% of total loans vs. $14.6B and 2.38% a year ago. Corporate non-accrual loans of $2.3B up 46% from last quarter, up 97% from a year ago (energy).
- Total loans of $619B about flat from a year ago, and deposits of $935B up 4%.
- Total markets & securities services revenue of $4.075B down 15% Y/Y, with fixed-income revenue of $3.085B down 11%.
- Citi Holdings ending assets at $73B down from $81B last quarter and $130B a year ago. With the "bad bank" now representing such a small portion of overall bank assets, it will not be reported separately after this year.
- Conference call at 11 ET
- Previously: Citigroup beats by $0.07, beats on revenue (April 15)
- C +2.4% premarket
Fri, Apr. 15, 8:01 AM
Citicorp, Inc. operates as a bank holding company. The firm through its subsidiaries provides banking, lending, insurance, investment, and commercial banking services. The company was founded in 1967 and is headquartered in New York, NY.
Industry: Money Center Banks
Country: United States