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The Zacks Analyst Blog Highlights: Citigroup, Wells Fargo and JPMorgan
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For Immediate Release
Chicago, IL – March 5, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Citigroup (C - Free Report) , Wells Fargo (WFC - Free Report) and JPMorgan (JPM - Free Report) .
Over the last five trading days, volatility in the stock market affected the banking stocks as well. The Fed Chair Jerome Powell’s congressional testimony dominated, wherein he presented an optimistic picture of the U.S. economy. This view hints at a rise in inflation, which will give the Fed all the more reason to take a hawkish stance in raising interest rates.
Additionally, growth in economy, low unemployment rate and strong consumer sentiment will drive the demand for loans and other related products of banks. These will support banks’ financials though the markets seem to be wary of such a scenario. Hence, this led to significant volatility and bank stocks’ performance turned bearish over the last five trading sessions.
Driven by the Fed’s upbeat view on the economy, mortgage rates were also on an upswing with 30-year mortgages averaging 4.43% (highest in more than four years). However, homeowners seeking lower rates for refinancing are definitely big-time losers. Rise in mortgage rates will limit refinancing activity.
Coming to company-specific news related to banks, business misconducts continued to dominate headlines. On the other hand, banks seem to be optimistic about gains from improving economy.
Further, Federal Deposit Insurance Corp. (FDIC)-insured commercial banks and savings institutions reported fourth-quarter 2017 earnings of $42.2 billion, down 2.3% year over year. Results were adversely impacted by elevated income taxes, higher non-interest expenses and loan loss provisions.
1. Citigroup plans to refund about $330 million to its credit card customers by the latter half of this year, after having confessed to charging higher interest rates to some of the defaulters, since 2011. The bank discovered to have kept overcharging about 1.75 million accounts. (Read more: Citi to Make Refunds for Overcharging Credit Card Customers)
2. Already burdened by mounting legal woes, Wells Fargo, one of the biggest players in the U.S. mortgage business, faces yet another suit over its discriminatory lending practices. This time, the company has been sued by the city of Sacramento. The suit accuses the bank of targeting African-American and Latino communities in Sacramento for issuing loans with more expensive and higher risk compared to loans made to white borrowers. (Read more: Wells Fargo Sued Over Unfair Discrimination Practices)
3. In yet other setback for Wells Fargo, it disclosed to have overcharged customers in investment and fiduciary services business. In the annual filing, the bank said the review process of its Wealth and Investment Management segment is in “preliminary stages.”
After facing inquiries from the financial regulators in late 2017 for forcing customers to buy products and services they did not require, Wells Fargo agreed to do a detailed investigation of the segment.
In its latest 10-K filing, the bank revealed that it is currently assessing whether there has been unjustified referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments and referrals of brokerage customers to the bank’s investment and fiduciary services business.
So far in the review process, the bank has found that in some cases customers have been overcharged fees in connection with certain assets and accounts. There have been issues of incorrect set-up and maintenance in the system of record of the values associated with certain assets.
Wells Fargo is yet to determine the number of accounts that were affected along with the reason that led to the wrongdoing.
4. At annual Investors’ Day conference, JPMorgan’s management discussed the current macroeconomic backdrop and the path the company is taking to enhance profitability over the medium term. Also, it provided first quarter and full-year 2018 guidance. Along with this, the company provided details about how the newly implemented Tax Cuts and Jobs Act will affect its financials going forward. (Read more: The Road Ahead for JPMorgan Amid Improving Economy)
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Citigroup, Wells Fargo and JPMorgan
For Immediate Release
Chicago, IL – March 5, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Citigroup (C - Free Report) , Wells Fargo (WFC - Free Report) and JPMorgan (JPM - Free Report) .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Friday’s Analyst Blog:
Bank Stock Roundup: Focus on Powell’s Testimony
Over the last five trading days, volatility in the stock market affected the banking stocks as well. The Fed Chair Jerome Powell’s congressional testimony dominated, wherein he presented an optimistic picture of the U.S. economy. This view hints at a rise in inflation, which will give the Fed all the more reason to take a hawkish stance in raising interest rates.
Additionally, growth in economy, low unemployment rate and strong consumer sentiment will drive the demand for loans and other related products of banks. These will support banks’ financials though the markets seem to be wary of such a scenario. Hence, this led to significant volatility and bank stocks’ performance turned bearish over the last five trading sessions.
Driven by the Fed’s upbeat view on the economy, mortgage rates were also on an upswing with 30-year mortgages averaging 4.43% (highest in more than four years). However, homeowners seeking lower rates for refinancing are definitely big-time losers. Rise in mortgage rates will limit refinancing activity.
Coming to company-specific news related to banks, business misconducts continued to dominate headlines. On the other hand, banks seem to be optimistic about gains from improving economy.
Further, Federal Deposit Insurance Corp. (FDIC)-insured commercial banks and savings institutions reported fourth-quarter 2017 earnings of $42.2 billion, down 2.3% year over year. Results were adversely impacted by elevated income taxes, higher non-interest expenses and loan loss provisions.
(Read: Bank Stock Roundup for the week ending Feb 23, 2018)
Important Developments of the Week
1. Citigroup plans to refund about $330 million to its credit card customers by the latter half of this year, after having confessed to charging higher interest rates to some of the defaulters, since 2011. The bank discovered to have kept overcharging about 1.75 million accounts. (Read more: Citi to Make Refunds for Overcharging Credit Card Customers)
2. Already burdened by mounting legal woes, Wells Fargo, one of the biggest players in the U.S. mortgage business, faces yet another suit over its discriminatory lending practices. This time, the company has been sued by the city of Sacramento. The suit accuses the bank of targeting African-American and Latino communities in Sacramento for issuing loans with more expensive and higher risk compared to loans made to white borrowers. (Read more: Wells Fargo Sued Over Unfair Discrimination Practices)
3. In yet other setback for Wells Fargo, it disclosed to have overcharged customers in investment and fiduciary services business. In the annual filing, the bank said the review process of its Wealth and Investment Management segment is in “preliminary stages.”
After facing inquiries from the financial regulators in late 2017 for forcing customers to buy products and services they did not require, Wells Fargo agreed to do a detailed investigation of the segment.
In its latest 10-K filing, the bank revealed that it is currently assessing whether there has been unjustified referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments and referrals of brokerage customers to the bank’s investment and fiduciary services business.
So far in the review process, the bank has found that in some cases customers have been overcharged fees in connection with certain assets and accounts. There have been issues of incorrect set-up and maintenance in the system of record of the values associated with certain assets.
Wells Fargo is yet to determine the number of accounts that were affected along with the reason that led to the wrongdoing.
4. At annual Investors’ Day conference, JPMorgan’s management discussed the current macroeconomic backdrop and the path the company is taking to enhance profitability over the medium term. Also, it provided first quarter and full-year 2018 guidance. Along with this, the company provided details about how the newly implemented Tax Cuts and Jobs Act will affect its financials going forward. (Read more: The Road Ahead for JPMorgan Amid Improving Economy)
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.