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Bank Stock Roundup: Rise in Bond Yield, Easing Global Growth Concerns, JPM & WFC in Focus
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Over the last five trading days, major banks rallied on rising bond yields. The 10-year bond yields climbed to 2.52%, on easing global growth concerns which was prompted by upbeat manufacturing data from the United States and China. Further, new developments in the U.S.-China trade negotiations reduced investors’ anxiety.
Rising bond yields drove banks’ net internet margins, which are expected to improve profitability in the quarters ahead. Further, the new-proposed rule that will likely limit impact of major bank failures on the financial system raises investors’ optimism in bank stocks.
Talking about company-specific headlines, banks continued with restructuring and streamlining initiatives. These efforts are anticipated to attract more business and support revenue growth. Moreover, with technology advancement, increase in digital offerings by major banks was at the peak.
1. JPMorgan (JPM - Free Report) and Nomura Holdings Inc. (NMR - Free Report) have received regulatory nod for setting up brokerage joint ventures (JVs) in China. The Chinese regulator — the China Securities Regulatory Commission (“CSRC”) — took this decision in order to further widen foreign firms’ access to financial markets. (Read more: China Approves JPMorgan & Nomura's Brokerage Joint Ventures)
2. Citigroup (C - Free Report) is set to acquire residential mortgages and unsecured loans by paying £4.9 billion ($6.4 billion). The assets are put up for sale by the UK Asset Resolution Limited (UKAR), the U.K. government’s so-called “bad bank”. The firm is likely to close the sale of two portfolios within the next few weeks. Notably, Pacific Investment Management Co. is the financier for the deal. “This is a significant step in the reduction and simplification of our balance sheet,” said Ian Hares, chief executive officer of UKAR. Citigroup in London refrained from comments. Notably, balance sheet of UKAR has been reduced by 93% since its initiation to £8 billion through sale of assets. (Read more: Citigroup Set to Acquire $6.4B Mortgage Book of UKAR)
3. In order to match pace with the changing technological trends, Wells Fargo & Company (WFC - Free Report) is embracing a faster and secured mode of payment through the launch of contactless consumer credit and debit cards. Under contactless or “Tap-and-Pay” payment methods, one simply has to tap the payment terminal with the card. It uses the same near-field communication technology that is used by several mobile wallets such as Apple Pay and Google Pay. With these cards, Wells Fargo’s customers can make everyday purchases and payments. Also, access to Wells Fargo’s ATMs network will be enabled by touch of contactless debit cards. (Read more: Wells Fargo Offers Clients Tap-to-Pay Contactless Cards)
4. In sync with its efforts to improve digital capabilities, KeyCorp (KEY - Free Report) has completed the acquisition of New York-based Laurel Road Bank's digital lending business. The financial terms of the transaction, announced in January, were not disclosed. KeyCorp will utilize Laurel Road's proven ability to attract and serve professional millennial clients (healthcare professionals, lawyers and graduate students) through customized, end-to-end lending products. (Read more: KeyCorp Closes Laurel Road Deal, Strengthens Online Lending)
5. Fifth Third Bancorp’s (FITB - Free Report) acquisition of Chicago-based MB Financial has brought along plans to slash about 500 jobs in the Chicago area and some branch reductions. The bank primarily aims to remove back office and administrative positions that are being duplicated on account of merger.
The bank has informed the Illinois Department of Commerce and Economic Opportunity that it will to begin layoffs in May. Most of the reduction will be seen in Rosemont with about two dozen in MB Financial’s previous headquarters. Further, 47 branches in the Chicago-area are to be shut down as an outcome of the deal. Though the company has not disclosed which branches are to be closed, it is targeting those that are in close vicinity of each other, given the acquisition of Fifth Third and MB Financial.
Price Performance
Here is how the seven major stocks performed:
Company
Last Week
6 months
JPM
5.1%
-7.0%
BAC
5.7%
-3.2%
WFC
1.8%
-6.5%
C
5.8%
-8.1%
COF
6.1%
-9.4%
USB
3.3%
-5.8%
PNC
4.7%
-6.3%
Over the last five trading sessions, Capital One Financial (COF - Free Report) and Citigroup were the major gainers, with their shares increasing 6.1% and 5.8%, respectively. Moreover, shares of BofA climbed 5.7%.
In the past six months, shares of Capital One Financial and Citigroup have depreciated around 9.4% and 8.1%, respectively. Further, shares of JPMorgan have lost 7%.
What’s Next?
Over the next five trading days, performance of bank stocks will likely remain the same unless any unexpected event occurs.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
Image: Bigstock
Bank Stock Roundup: Rise in Bond Yield, Easing Global Growth Concerns, JPM & WFC in Focus
Over the last five trading days, major banks rallied on rising bond yields. The 10-year bond yields climbed to 2.52%, on easing global growth concerns which was prompted by upbeat manufacturing data from the United States and China. Further, new developments in the U.S.-China trade negotiations reduced investors’ anxiety.
Rising bond yields drove banks’ net internet margins, which are expected to improve profitability in the quarters ahead. Further, the new-proposed rule that will likely limit impact of major bank failures on the financial system raises investors’ optimism in bank stocks.
Talking about company-specific headlines, banks continued with restructuring and streamlining initiatives. These efforts are anticipated to attract more business and support revenue growth. Moreover, with technology advancement, increase in digital offerings by major banks was at the peak.
(Read: Bank Stock Roundup for the Week Ending Mar 29, 2019)
Important Developments of the Week
1. JPMorgan (JPM - Free Report) and Nomura Holdings Inc. (NMR - Free Report) have received regulatory nod for setting up brokerage joint ventures (JVs) in China. The Chinese regulator — the China Securities Regulatory Commission (“CSRC”) — took this decision in order to further widen foreign firms’ access to financial markets. (Read more: China Approves JPMorgan & Nomura's Brokerage Joint Ventures)
2. Citigroup (C - Free Report) is set to acquire residential mortgages and unsecured loans by paying £4.9 billion ($6.4 billion). The assets are put up for sale by the UK Asset Resolution Limited (UKAR), the U.K. government’s so-called “bad bank”. The firm is likely to close the sale of two portfolios within the next few weeks. Notably, Pacific Investment Management Co. is the financier for the deal. “This is a significant step in the reduction and simplification of our balance sheet,” said Ian Hares, chief executive officer of UKAR. Citigroup in London refrained from comments. Notably, balance sheet of UKAR has been reduced by 93% since its initiation to £8 billion through sale of assets. (Read more: Citigroup Set to Acquire $6.4B Mortgage Book of UKAR)
3. In order to match pace with the changing technological trends, Wells Fargo & Company (WFC - Free Report) is embracing a faster and secured mode of payment through the launch of contactless consumer credit and debit cards. Under contactless or “Tap-and-Pay” payment methods, one simply has to tap the payment terminal with the card. It uses the same near-field communication technology that is used by several mobile wallets such as Apple Pay and Google Pay. With these cards, Wells Fargo’s customers can make everyday purchases and payments. Also, access to Wells Fargo’s ATMs network will be enabled by touch of contactless debit cards. (Read more: Wells Fargo Offers Clients Tap-to-Pay Contactless Cards)
4. In sync with its efforts to improve digital capabilities, KeyCorp (KEY - Free Report) has completed the acquisition of New York-based Laurel Road Bank's digital lending business. The financial terms of the transaction, announced in January, were not disclosed. KeyCorp will utilize Laurel Road's proven ability to attract and serve professional millennial clients (healthcare professionals, lawyers and graduate students) through customized, end-to-end lending products. (Read more: KeyCorp Closes Laurel Road Deal, Strengthens Online Lending)
5. Fifth Third Bancorp’s (FITB - Free Report) acquisition of Chicago-based MB Financial has brought along plans to slash about 500 jobs in the Chicago area and some branch reductions. The bank primarily aims to remove back office and administrative positions that are being duplicated on account of merger.
The bank has informed the Illinois Department of Commerce and Economic Opportunity that it will to begin layoffs in May. Most of the reduction will be seen in Rosemont with about two dozen in MB Financial’s previous headquarters. Further, 47 branches in the Chicago-area are to be shut down as an outcome of the deal. Though the company has not disclosed which branches are to be closed, it is targeting those that are in close vicinity of each other, given the acquisition of Fifth Third and MB Financial.
Price Performance
Here is how the seven major stocks performed:
Company
Last Week
6 months
JPM
5.1%
-7.0%
BAC
5.7%
-3.2%
WFC
1.8%
-6.5%
C
5.8%
-8.1%
COF
6.1%
-9.4%
USB
3.3%
-5.8%
PNC
4.7%
-6.3%
Over the last five trading sessions, Capital One Financial (COF - Free Report) and Citigroup were the major gainers, with their shares increasing 6.1% and 5.8%, respectively. Moreover, shares of BofA climbed 5.7%.
In the past six months, shares of Capital One Financial and Citigroup have depreciated around 9.4% and 8.1%, respectively. Further, shares of JPMorgan have lost 7%.
What’s Next?
Over the next five trading days, performance of bank stocks will likely remain the same unless any unexpected event occurs.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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