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Bank Stock Roundup: Stocks Plunge on Trade War Worries, JPMorgan & Citi in Focus
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Over the past five trading sessions, major market indexes witnessed significant sell-off (majority occurring over the last two days), and major banks were not untouched. Concerns related to the impact of rising interest rates and trade war on the global economy as well as increasing yields on government bonds were the primary reasons for the decline in stock market. President Trump’s comments criticizing the Federal Reserve for persistently increasing the interest rates added fuel to fire.
While rising interest rates are beneficial for banks’ financials, worries related to flattening of yield curve and increasing deposit betas continue to weigh on investors’ mind. This is expected to hurt banks’ net interest margins to some extent. However, with earnings season commencing, investors will now be keeping an eye on financial performance of major banks and management commentary related to their prospects amid the concerns.
Talking about company-specific headlines, banks continued with restructuring and streamlining initiatives. These efforts are expected to attract more business and support revenue growth. Resolution of probes and lawsuits related to legacy matters continued as well.
1. JPMorgan (JPM - Free Report) plans to cut nearly 400 positions in its consumer home lending division. This news was first reported by the Wall Street Journal. The bank is laying off employees in three states — Florida, Arizona and Ohio. Particularly, the cities including Jacksonville, Phoenix, Cleveland and Columbus are expected to face the cuts. (Read more: JPMorgan to Trim Mortgage Banking Division, Slash 400 Jobs)
2. In a note sent out to customers, Citigroup (C - Free Report) has announced plans to establish a new British headquarter in London for its consumer operations on account of Brexit. Though the company awaits necessary regulatory approvals, the transfer is expected to be completed by March 2019. The news was reported by Reuters. (Read more: Citigroup to Shift Consumer Business Headquarter to London)
3. Citigroup is likely to be slapped with penalty for not offering mortgage discounts to the minority clients that it offered to others, per a Reuters report. The Office of the Comptroller of the Currency is currently examining the matter to ascertain whether any violations to the Fair Lending Act were made. (Read more: Citigroup Faces OCC Investigation for Fair Lending Breach)
4. The Australian subsidiaries of Citigroup and Deutsche Bank faced court on Tuesday over allegations of criminal cartel conduct during the sale of Australia and New Zealand Banking Group Limited’s shares worth A$2.5 billion ($1.9 billion) in Australia. Lawyers of the accused have demanded the prosecution to file a statement of facts to know in details what the banks and bankers are charged of. (Read more: Citi and Deutsche Bank Units Face Court Over Cartel Case)
Price Performance
Here is how the seven major stocks performed:
Company
Last Week
6 months
JPM
-5.7%
-1.0%
BAC
-6.2%
-4.3%
WFC
-3.3%
0.5%
C
-5.6%
-1.1%
COF
-5.3%
-3.8%
USB
-3.1%
3.8%
PNC
-5.0%
-10.9%
Over the past five trading sessions, all major bank stocks were in the red. Specifically, Bank of America (BAC - Free Report) and JPMorgan were the main losers, with their shares falling 6.2% and 5.7%, respectively. Further, shares of Citigroup declined 5.6%.
In the past six months, shares of PNC Financial and BofA were the primary losers, with their shares declining 10.9% and 4.3%, respectively. On the other hand, U.S. Bancorp (USB - Free Report) and Wells Fargo have gained 3.8% and 0.5%, respectively.
What’s Next?
Over the next five trading days, the focus will solely be on earnings releases. Some major banks slated to report results in the next five trading days are BofA on Oct 15 and Comerica (CMA - Free Report) on Oct 16. Additionally, U.S. Bancorp will come out with results on Oct 17, while KeyCorp (KEY - Free Report) , BNY Mellon (BK - Free Report) and BB&T Corporation are scheduled to release quarterly figures on Oct 18.
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Bank Stock Roundup: Stocks Plunge on Trade War Worries, JPMorgan & Citi in Focus
Over the past five trading sessions, major market indexes witnessed significant sell-off (majority occurring over the last two days), and major banks were not untouched. Concerns related to the impact of rising interest rates and trade war on the global economy as well as increasing yields on government bonds were the primary reasons for the decline in stock market. President Trump’s comments criticizing the Federal Reserve for persistently increasing the interest rates added fuel to fire.
While rising interest rates are beneficial for banks’ financials, worries related to flattening of yield curve and increasing deposit betas continue to weigh on investors’ mind. This is expected to hurt banks’ net interest margins to some extent. However, with earnings season commencing, investors will now be keeping an eye on financial performance of major banks and management commentary related to their prospects amid the concerns.
Talking about company-specific headlines, banks continued with restructuring and streamlining initiatives. These efforts are expected to attract more business and support revenue growth. Resolution of probes and lawsuits related to legacy matters continued as well.
(Read: Bank Stock Roundup for the Week Ending Oct 5, 2018)
Important Developments of the Week
1. JPMorgan (JPM - Free Report) plans to cut nearly 400 positions in its consumer home lending division. This news was first reported by the Wall Street Journal. The bank is laying off employees in three states — Florida, Arizona and Ohio. Particularly, the cities including Jacksonville, Phoenix, Cleveland and Columbus are expected to face the cuts. (Read more: JPMorgan to Trim Mortgage Banking Division, Slash 400 Jobs)
2. In a note sent out to customers, Citigroup (C - Free Report) has announced plans to establish a new British headquarter in London for its consumer operations on account of Brexit. Though the company awaits necessary regulatory approvals, the transfer is expected to be completed by March 2019. The news was reported by Reuters. (Read more: Citigroup to Shift Consumer Business Headquarter to London)
3. Citigroup is likely to be slapped with penalty for not offering mortgage discounts to the minority clients that it offered to others, per a Reuters report. The Office of the Comptroller of the Currency is currently examining the matter to ascertain whether any violations to the Fair Lending Act were made. (Read more: Citigroup Faces OCC Investigation for Fair Lending Breach)
4. The Australian subsidiaries of Citigroup and Deutsche Bank faced court on Tuesday over allegations of criminal cartel conduct during the sale of Australia and New Zealand Banking Group Limited’s shares worth A$2.5 billion ($1.9 billion) in Australia. Lawyers of the accused have demanded the prosecution to file a statement of facts to know in details what the banks and bankers are charged of. (Read more: Citi and Deutsche Bank Units Face Court Over Cartel Case)
Price Performance
Here is how the seven major stocks performed:
Company
Last Week
6 months
JPM
-5.7%
-1.0%
BAC
-6.2%
-4.3%
WFC
-3.3%
0.5%
C
-5.6%
-1.1%
COF
-5.3%
-3.8%
USB
-3.1%
3.8%
PNC
-5.0%
-10.9%
Over the past five trading sessions, all major bank stocks were in the red. Specifically, Bank of America (BAC - Free Report) and JPMorgan were the main losers, with their shares falling 6.2% and 5.7%, respectively. Further, shares of Citigroup declined 5.6%.
In the past six months, shares of PNC Financial and BofA were the primary losers, with their shares declining 10.9% and 4.3%, respectively. On the other hand, U.S. Bancorp (USB - Free Report) and Wells Fargo have gained 3.8% and 0.5%, respectively.
What’s Next?
Over the next five trading days, the focus will solely be on earnings releases. Some major banks slated to report results in the next five trading days are BofA on Oct 15 and Comerica (CMA - Free Report) on Oct 16. Additionally, U.S. Bancorp will come out with results on Oct 17, while KeyCorp (KEY - Free Report) , BNY Mellon (BK - Free Report) and BB&T Corporation are scheduled to release quarterly figures on Oct 18.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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