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Bank Stock Roundup: Robust Economic Data, Q2 Earnings, C, OZRK in Focus

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In the last five trading days, bank stocks delivered a bullish performance. While escalating trade war between the United States, China and the European Union continued to weigh on investor sentiments, strong economic data on the domestic front largely mitigated this.

The latest job market data lessened the concern that the economy is in the late stage of expansion. This news resulted in rising yield on benchmark 10-year Treasury Notes. Hence, the bank stocks gained as their financials are dependent on improving economy and widening of spread.

Coming to company specific news, banks’ efforts to digitize operations continued. Further, as Brexit deadline looms, companies are making plans to lessen business disruptions from it. Also, investors’ focus shifted to the second-quarter reporting cycle.

Additionally, banks rewarded shareholders with dividend hikes following the 2018 capital plan approval.

(Read: Bank Stock Roundup for the Week Ending Jul 6, 2018)



Important Developments of the Week

1. Citigroup (C - Free Report) plans to introduce a new app, likely be launched in the current quarter, which is expected to help grow retail deposits. The app is also expected to support expansion of its wealth management operations. With no intention to open new branches, this seems to be the best option for the bank. (Read more: Citigroup Betting on Technology to Enhance Deposit Growth)

2. BlackRock Inc. and Citigroup have selected Paris over London as their new base for operations post-Brexit, per the Financial Times. This is the result of the promise of a cut in the tax rate by the French president, Emmanuel Macron. (Read more: BlackRock & Citi Select Paris for Expansion Post-Brexit)

3. Bank of the Ozarks Inc.’s second-quarter 2018 earnings per share of 89 cents came in line with the Zacks Consensus Estimate. Results primarily benefited from an improvement in net interest income. However, elevated expenses, lower non-interest income and higher provisions were the undermining factors. (Read more: Bank of the Ozarks Q2 Earnings in Line, Costs Rise)

4. Following the approval of its capital plan by the Federal Reserve in June, KeyCorp’s (KEY - Free Report) board of directors announced a 41.7% hike in the quarterly dividend. The revised sum is now 17 cents per share. The dividend will be paid on Sep 14 to shareholders on record as of Aug 28. (Read more: KeyCorp Rewards Investors With 42% Dividend Increase)

Price Performance

Here is how the seven major stocks performed:
 

Company

Last Week

6 months

JPM

2.7%

-4.2%

BAC

2.6%

-7.0%

WFC

0.3%

-9.2%

C

2.0%

-10.1%

COF

2.5%

-8.9%

USB

2.3%

-8.8%

PNC

1.5%

-8.2%


Over the last five trading sessions, JPMorgan and Bank of America (BAC - Free Report) were the major winners, with their shares gaining 2.7% and 2.6%, respectively. Further, shares of Capital One Financial (COF - Free Report) and U.S. Bancorp (USB - Free Report) were up 2.5% and 2.3%, respectively.

In the past six months, shares of Citigroup and Wells Fargo have lost 10.1% and 9.2%, respectively. Moreover, Capital One stock has declined 8.9%.

What’s Next?

The focus will entirely be on earnings releases over the next five trading sessions. Bank of America is reporting on Jul 16, Comerica Incorporated on Jul 17 and U.S. Bancorp on Jul 18.

Further, on Jul 19, we have five major banks reporting — KeyCorp, BB&T Corporation , Fifth Third Bancorp, Capital One and The Bank of New York Mellon Corporation. Performance of banking stocks is expected to solely depend on the upcoming results and management commentary following the release.

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