Bank stocks were down over the last five trading days. As the Q3 earnings season has already started, investors seem to be taking cautious steps with the concern of the tough operating backdrop hurting banks’ performance.
Speaking of the company specific developments, Wells Fargo & Company (WFC - Free Report) continued to remain in focus, with the resignation of its CEO John Stumpf and appointment of Tim Sloan as his replacement. However, the crisis is far from over, with states, including Illinois and California, and cities, such as Chicago and Seattle, suspending their businesses with the bank.
In addition, banks’ streamlining activities continued over the last five trading sessions. These efforts are likely to support banks’ bottom line as revenue headwinds are likely to persist in the near term.
(Read: Bank Stock Roundup for the week ending Oct 7, 2016)
Important Developments of the Week
1. In the wake of public and political outrage concerning the sales scam, Wells Fargo’s Chief Executive Officer, John Stumpf, has decided to step down, effective immediately. Tim Sloan, the company’s President and Chief Operating Officer, will be succeeding Stumpf. (Read more: Will Tim Sloan be the Turnaround CEO for Wells Fargo?)
2. Bank of the Ozarks, Inc.’s OZRK third-quarter 2016 earnings of 66 cents per share surpassed the Zacks Consensus Estimate of 59 cents. Better-than-expected results were driven by a rise in both net interest income and non-interest income during the quarter. However, rising provision for credit losses and non-interest expenses were the headwinds. (Read more: Bank of the Ozarks Q3 Earnings Beat, Stock Down)
3. As part of its plan to boost profits by reducing costs, Citigroup Inc. (C - Free Report) recently agreed to sell its consumer banking business in both Brazil and Argentina. Latin America’s largest bank Itau Unibanco Holdings S.A. (ITUB - Free Report) agreed to purchase the Brazilian unit for 710 million reais ($220 million). However, the price agreed by Banco Santander Rio, which will acquire the Argentina unit, remained undisclosed. (Read more: Citigroup to Sell Units in Brazil and Argentina)
Here is how the seven major stocks performed:
In the last five trading sessions, shares of The PNC Financial Services Group, Inc. (PNC - Free Report) and Capital One Financial Corp. COF declined 3.8% and 2.7%, respectively. Further, both Bank of America Corp. (BAC - Free Report) and U.S. Bancorp (USB - Free Report) fell 1.9%.
Over the last six months, BofA and JPMorgan Chase & Co. (JPM - Free Report) were the best performers, with their shares surging 14.8% and 9.6%, respectively. However, Wells Fargo declined 8.7% over the same time frame.
What's Next in the Banking Space?
Over the next five trading days, the Q3 earnings for banks will be in full swing. On Oct 17, BofA is slated to announce results. Comerica Inc. (CMA - Free Report) and Regions Financial Corp. (RF - Free Report) are set to report their quarterly numbers on Oct 18.
Further, U.S. Bancorp and BB&T Corp. (BBT - Free Report) will report on Oct 19, while Fifth Third Bancorp (FITB - Free Report) and The Bank of New York Mellon Corp. (BK - Free Report) are scheduled to announce their results on Oct 20. The performance of bank stocks will likely be in sync with their Q3 results.
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