Today, 11:47 AM
- "We certainly recognize all the headwinds, notably on the regulatory capital side, but low-hanging fruit on capital efficiency actions should drive some ROE improvement," says the team of David Trone and Pankaj Chitrakar, and they expect better CCAR outcomes for at least a few of the names (including Citi, one would think) in a few weeks.
- As for operating results, whether they come in good or not so good this year hinges on whether the Fed hikes or not. That forecast sounds a lot like 2014, 2013, and 2012, but the two note the likelihood of higher rates appears far higher this year.
- They maintain Buy ratings on Citigroup (C +0.1%), Morgan Stanley (MS +1%), Goldman Sachs (GS +1%), Bank of America (BAC +0.7%), and JPMorgan (JPM +1.1%), with Citi, Goldman, and Morgan Stanley their top picks.
- Previously: Financials go on sale in January (Jan. 24)
Yesterday, 7:08 AM
- Under a deal with NY Attorney General Eric Schneiderman, Citigroup's (NYSE:C) Citibank is set to announce new screening processes for checking and savings accounts which will be more forgiving of customers' histories.
- It's the 2nd bank to cut a deal with the AG, who says previous requirements often shut out low-income applicants and forced them into high-cost alternatives
- Citi's new rules are set to begin on March 15, and will change how Citibank uses information from consumer-reporting agency ChexSystems. Under the agreement, Citi will only decline applicants if they have two or more reported incidents of abuse in recent years, the total combined loss exceeds $500, and the losses remain unpaid.
Sat, Jan. 24, 4:48 PM
- The financial sector is off to a worse start to the year than even the energy names, with the XLF down 3.9% YTD vs. the XLE's 3.2% decline. The S&P 500 is roughly flat. The SPDR KBW Bank ETF (NYSEARCA:KBE) is off 7.5%, and the Regional Bank ETF (NYSEARCA:KRE) is lower by 6.9%.
- Q4 earnings results haven't been wonderful, but financial names had been savaged well before those reports started coming out. Instead there's a difficult regulatory regime that won't quit, and - for now - it's looking like "wait'll next year" for the rising interest rates that were supposed to drive profit margins higher. The 10-year/2-year spread - already pretty low at 150 basis points to start the year - has narrowed to 137 bps.
- A partial roll call of banks: Bank of America (NYSE:BAC) -12.1% YTD, Citigroup (NYSE:C) -10.1%, JPMorgan (NYSE:JPM) -9.4%, Morgan Stanley (NYSE:MS) -9.4%, Regions Financial (NYSE:RF) -14.7%, KeyCorp (NYSE:KEY) -4.5%, PNC Financial (NYSE:PNC) -5.4%, Bank of New York (NYSE:BK) -9.1%, Capital One (NYSE:COF) -6%, Discover (NYSE:DFS) -13.6%.
- Other spread-starved sector names: MetLife (NYSE:MET) -9.8%, AIG (NYSE:AIG) -8%, Prudential (NYSE:PRU) -10.8%, Schwab (NYSE:SCHW) -9.9%.
- Some of what's working in financials: Blackstone (NYSE:BX) +6.7%, E*Trade (NASDAQ:ETFC) +1.2%, WisdomTree (NASDAQ:WETF) +12.3%, Legg Mason +2.8%.
Thu, Jan. 22, 12:35 PM
- Mercilessly sold since the year turned, banks are putting in a rare session of outperformance, helped along by some earnings beats from regional lenders and the return of animal spirits in M&A with RBC's purchase of City National (CYN +18.6%) for $5.4B.
- The XLF +1.4% vs. the S&P's 0.6% gain today, and the regional bank ETF (NYSEARCA:KRE) is higher by 3.1%.
- Among today's reporters putting in big gains are KeyCorp (KEY +5.5%), BB&T (BBT +2.4%), and Huntington Bancshares (HBAN +2.6%), though Flagstar Bancorp (FBC -4.8%) missed estimates.
- Others: Regions Financial (RF +3.9%), PNC Financial (PNC +1.6%), Synovus (SNV +3.2%), M&T Bank (MTB +3%), Hudson City (HCBK +3.1%), First Horizon (FHN +2.7%), and First Republic (FRC +4.9%).
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, IAI, SEF, IYG, FXO, FNCL, KBWB, QABA, FINU, KRU, RWW, KBWR, RYF, PSCF, FINZ, KRS
- Among the TBTFs, Citigroup (C +2.7%) and Bank of America (BAC +2.5%) are leading the way.
Wed, Jan. 21, 2:45 PM
- Citigroup (C +1%) could ask for an incremental buyback of up to $3.2B should a sale of OneMain in the $4B+ plus range happens, says Morgan Stanley's Betsy Graseck. That's on top of the nickel dividend and $4B buyback she expects the bank has already requested from regulators.
- There is precedent. The Fed in 2013 approved Capital One's $1B buyback request following the sale of its Best Buy portfolio.
- Citi's plan for capital returns are front and center this year after the bank's dividend and buyback requests were rejected in 2014.
Fri, Jan. 16, 2:24 PM
- The losses occurred on Citigroup's (C -0.4%) trading desks and aren't tied to the bank's relationship with teetering FXCM. Citi revenues in Q4 were $17.8B.
- Earlier, the WSJ reported Deutsche Bank lost about $150M and Barclays somewhat less than that amount.
- Previously: Report: Jefferies may bail out FXCM (Jan. 16)
Thu, Jan. 15, 4:56 PM
Thu, Jan. 15, 11:56 AM
- Citigroup's (C -2.6%) plan to cut back globally is well known, but the bank is also pulling back at home. and CFO John Gerspach - speaking on the earnings call - notes 130 North American branches were closed in 2014 and another 60 are expected to close this year. Going forward, Citi will be focusing on customers in the largest U.S. cities - New York, Chicago, Boston, L.A, San Francisco, and D.C.
- Webcast and presentation slides
- Like Bank of America CFO Bruce Thompson earlier today, Gerspach says volatility isn't necessarily a plus for the trading unit, and cites "volatile volatility" as restraining FICC results (-33% from Q3, down 16% Y/Y).
- Previously: Citi slips premarket as revenue comes in light (Jan. 15)
- Previously: Citigroup misses by $0.05, misses on revenue (Jan. 15)
Thu, Jan. 15, 8:18 AM
- Q4 net income of $350M vs. $2.5B one year ago, with Q4 legal and related expenses of $2.9B vs. $809M. Repositioning charges were another $600M.
- Citicorp adjusted net income of $185M vs. $3.034B a year ago on adjusted revenue of $16.492B vs. $16.637B (see above legal charges).
- Global Consumer Banking net income of $1.666B up 8% Y/Y on revenue of $9.442B, flat from a year ago. North American revenues grew 4%, while EMEA, LatAm, and Asia revenues all fell.
- Institutional Clients Group net income of $1.637B up 13% Y/Y on revenue (ex-DVA) of $7.187B, flat from a year ago. Fixed income markets revenue of $1.988B falls 33% from Q3 and 16% from a year ago. Private banking, corporate lending, and securities services helped make up the difference.
- Citi Holdings adjusted net income of $161M vs. a loss of $432M a year ago as adjusted expenses fall to $765M from $1.493B. Assets now at $98B are off 16% from a year ago, and represent about 5% of total bank assets.
- Book value per share of $66.16 up 1% Y/Y; TBVS of $56.83 up 3%.
- Conference call at 11 ET
- Previously: Citigroup misses by $0.05, misses on revenue (Jan. 15)
- C -0.8% premarket
Thu, Jan. 15, 8:01 AM
Wed, Jan. 14, 5:30 PM
Tue, Jan. 13, 3:21 PM
- 2015 has opened much like 2014, with interest rates doing the exact opposite of what most expected, and falling sharply. It's a tough start for bank investors who have been counting on higher interest rates to help boost earnings for a number of years.
- In the meantime, deposits keep rolling in, and the pace of lending growth isn't quick enough to absorb all the money. In 2014, loan balances rose 4.4%, but securities holdings popped 12%, and cash assets jumped 22%.
- The good part of falling yields are unrealized gains on those security portfolios - negative a year ago, they're were in the green by about $15B on Dec. 31. More good news, says Goldman's Richard Ramsden: Valuations. The big banks are priced at about 9.9x estimated 2016 earnings, allowing for some nice upside if and when rates do decide to go higher.
- Reporting Q4 results tomorrow are JPMorgan (JPM) and Wells Fargo (WFC -0.8%), and on Thursday are Bank of America (BAC -1.4%) and Citigroup (C -0.9%).
Tue, Jan. 13, 8:20 AM
- The bank last year went from targeting 120 of the world's top150 cities to focusing its efforts on 100 cities where it has the greatest scale and potential. The result so far is the withdrawal from towns like Tokyo, Lima, Panama City, Dallas, and Houston. In the U.S. Citi (NYSE:C) is now focused on six cities vs. 14 previously.
- The challenge: Shrink in locations where the bank lacks critical mass, while not losing the brand of having a global network.
- Jonathan Larsen, who oversees Citi's overseas retail branch business: "We have to make sure that we are not subsidizing marginal operations for long periods."
Mon, Jan. 12, 12:33 PM
- Goldman made a bunch of headlines at the year's start by suggesting JPMorgan was worth more broken up, and now the WSJ's John Carney takes a look at a similar thesis for Citigroup (C -0.6%). To preview the answer: Citi is an even more attractive break-up candidate.
- Carney first notes the market isn't exactly pining for a JPMorgan split - its shares trade north of book value, as opposed to Citi which has sold for below book since September 2008.
- A Citi split could be among its four main businesses, suggests Carney: A global investment bank, a broker dealer focused on FICC trading, a global network of consumer banks, and a U.S. retail bank. Valuing each of these segments similar to smaller peers implies a total value of about $180B vs. today's $160B.
- Yes, the bank could lose its $50B DTA, but the market may be valuing that at pretty close to zero anyway, says Carney, and the potential for regulatory relief might far outweigh that or any other hurdles.
Mon, Jan. 12, 8:43 AM
- The collapse in oil prices is set to crimp one of the few fast growth areas for banks since the financial crisis - lending to the energy industry. Right now, we're just talking about a slowdown in lending, but Charles Peabody - who saw the losses incurred by Texas banks during the 1980s energy slump - expects the current situation to lead to losses as well.
- "It’s been a hot industry, probably a little too hot,” says Cullen/Frost (NYSE:CFR) CEO Dick Evans, whose bank has a sizable energy business. “But it is not time to panic. We have been in the game a long time. I am comfortable with what we have been doing.”
- The flip side of energy issues might be stronger business for banks elsewhere as consumers find themselves with more money in their pockets after filling up.
- Among the more sizable banks, Scotiabank (NYSE:BNS) leads the way with 34.6% of its investment banking revenue coming from energy companies. Next is RBC (NYSE:RY), with 20.2%, and then Wells Fargo (NYSE:WFC) with 14.9% and Citigroup (NYSE:C) with 11.8%. Others include Barclays (NYSE:BCS) with 10.7%, Credit Suisse (NYSE:CS) with 8.1%, and Bank of America (NYSE:BAC) with 7.4%.
Wed, Jan. 7, 6:53 AM
- U.S. District Judge Thomas Griesa has scheduled a March 3 hearing over whether Citigroup (NYSE:C) can process interest payments by Argentina on bonds issued under its local laws following its 2002 default.
- In November, Griesa put off holding a determinative hearing on the subject while allowing the bank to process a payment due the next month.
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Citigroup Inc is a financial services holding company. It provides financial products and services, including consumer banking, credit cards, corporate and investment banking, securities brokerage and wealth management.
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