Bank stocks dip even after Q1 earnings beat as bond yields drop

• The rally in bank stocks yesterday sparked by the first mega-banks posting better-than-expected Q1 earnings didn't last long.
• With the 10-year Treasury yield sinking 8 basis points to 1.55%, the KBW Nasdaq Bank Index drops 1.6% in midday trading in contrast to Wednesday's 1.4% gain.
• Today's batch of bank earnings hit many of the same highlights and lowlights as disclosed in yesterday's earnings reports — lower credit costs, credit reserve releases, higher deposits, net interest margins under pressure, lower loan balances, and surging trading and investment banking fees.
• Oppenheimer analyst Chris Kotowski notes that Citigroup's (C -0.8%) "trading and banking were a bit stronger than expected and net interest income a bit weaker, but it was basically all pretty close to expectations."
• Analysts are also positive on the company's plan to trim its retail bank operations in 13 Asian markets. Kotowski sees the move freeing up capital that would "no doubt" raise capital returns.
• Citi's Consumer Banking Group, though, "was noticeably soft" with its credit card business taking a "particularly nasty hit," comments Octavio Marenzi, CEO of Opimas LLC, a management consultancy focused on global capital markets.
• At Bank of America (BAC -3.8%), trading fees beat by ~$750M and investment banking fees beat by ~$350M, Jefferies analyst Ken Usdin points out. End-of-period and average loans were each down ~3% Q/Q with both missing consensus, he wrote.
• For U.S. Bancorp (USB -3.3%): "Overall, quarter was marked by weaker than expected top line & a bit higher expenses, more than offset by lower loan loss provision," writes Evercore ISI analyst John Pancari.
• "The combination of lower revenues and higher expenses translated into a 4.8% miss on PPNR and a higher efficiency ratio of 62.1% (vs. consensus of 60.8%)," said Wolfe Research analyst Bill Carcache.
• Summing up Truist Financial's (TFC -4.9%) results, Jeffries's Usdin sees a slight miss on core PPNR, net interest income and core fees in line, and core costs of $3.2B slightly ahead of consensus.
• Evercore's Pancari points out sees Truist's Q2 guidance as "modest negative," Management expects relatively flat tax equivalent net revenue, net interest income relatively flat, expenses also relatively flat, higher non-interest income in certain businesses, and net charge-offs of 30-45 basis point, better than Pancari's 55 bps estimate.
• Morgan Stanley (MS -0.7%), PNC Financial (PNC -2.9%), State Street (STT -0.2%), Bank of New York Mellon (BK -0.5%), Citizens Financial (CFG -3.2%), and Ally Financial (ALLY -0.3%) report their Q1 results tomorrow.
• Most regional banks are in the red: KeyCorp (KEY -2.1%), Regions Financial (RF -2.2%), Fifth Third Bancorp (FITB -2.1%), Huntington Bancshares (HBAN -2.3%), and M&T Bank (MTB -1.9%).
• Citi shares hold up better than most banks after it announces plans for its consumer bank to exit 13 Asian markets.