Investors eager to sell off shares of Wall Street’s biggest banks
Smooth sailing isn’t cutting it for Wall Street’s biggest banks.
Investors on Friday sold off shares of the largest US banks, even after two financial giants — JPMorgan Chase and Citigroup — reported better-than- expected second-quarter profits.
The two banks posted double-digits gains in profits in the period — helped by last year’s tax cut.
A third bank, the troubled Wells Fargo, reported profits that fell short of analysts’ expectations.
Wall Street appeared spooked by mortgage activity, which slowed as rates rose in the three-month period.
Wells Fargo’s mortgage unit saw revenue drop by 33 percent, to $770 million, from $1.15 billion the year before. JPMorgan likewise saw a 20 percent drop in mortgage fees and income, to $324 million.
JPM CEO Jamie Dimon was bullish when briefing analysts on his bank’s performance — downplaying concerns about the economy. JPM reported an 18 percent rise in profits.
“If you’re looking for potholes out there, there are not a lot,” Dimon said during a conference call. He did admit that there could be some “unpredictable outcomes” regarding the trade war now being waged between the US, China and the European Union.
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At Citigroup, led by CEO Michael Corbat, the results disappointed investors despite a 16 percent profit surge. Revenue was $18.47 billion, a smidge under the $18.51 billion analysts had expected.
Analysts attributed the bank’s profits mostly to tax cuts, and said that money from its card services and loans were disappointing.
“Loan growth missed estimates and that is opposite of what we have seen at peers that have reported today,” Brian Kleinhanzl, an analyst at Keefe, Bruyette & Woods, said in a note.
Wells Fargo, which was rocked by about a dozen different investigations into its toxic sales culture, saw its profits fall 11 percent, as legal costs related to regulatory matters ate away at returns.
The results made the bank look “rather hapless,” said Octavio Marenzi, CEO of management consultancy Opimas.
All six major banks, even those that didn’t report on Friday, were negative for the day.
JPM shares closed down 49 cents, to $106.36, while Wells fell 1.2 percent, to $55.36, and Citigroup declined 2.2 percent, to $67.
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