Welcome!

Microsoft Cloud Authors: Kevin Benedict, Pat Romanski, Liz McMillan, Lori MacVittie, Elizabeth White

News Feed Item

Bank of America and Citigroup Under Scrutiny: Are Banking Giants on a Conservative Approach to Q4 Earnings?

LONDON, January 23, 2013 /PRNewswire/ --

Earnings season is in full swing and major financial services giants are already out with their numbers. The banking sector is still struggling with the ghosts of its past as major banks are taking steps to hive off their loss making assets and cutting costs. However, the sector is still taking cautious approach as it looks to layoffs and trimming its work force to achieve higher efficiency. StockCall analysts recently posted two technical analysis reports on Bank of America Corp. (NYSE: BAC) and Citigroup Inc. (NYSE: C) which are available upon registration at http://www.stockcall.com/register

While corporations like Goldman Sachs are paring down their investment banking operations, banks like Wells Fargo are reducing their reliance on mortgage business. Bank of America reported its net income for the fourth quarter at $732 million, a sharp fall from the $2 billion it had earned for the fourth quarter last year. However, it managed to increase its full year net income from $1.4 billion to $4.2 billion. Similarly, Citigroup reported higher net income for the quarter, but fell short of market expectations. Its net income for the quarter was reported at $1.2 billion. Our technical analysis on Bank of America can be accessed by signing up today at http://www.StockCall.com/BAC012313.pdf  

Bank of America Cuts Costs

One common feature for both the companies' quarterly results was the legal mess they were/are in. Bank of America had to recognize $2.7 billion in settlement charges they have to pay Fannie Mae for warranties and representation fees, which had deep negative impact on its numbers for the fourth quarter of the year. The banking company is right on its way to cost-cutting. It is looking to slash its costs by $5 billion by the end of this calendar year, as a part of its NEW BAC initiative. While cost-cutting measures will certainly add to its bottom-line, a major chunk of this exercise will come from layoffs, which may not be so good for its employee morale. It is also likely to benefit from the rather stabilized economy as the bank will need to make lower provisions for loan losses.

Bank of America stock grew over 50% last year and going by its Q4 numbers, it can be assumed that it is likely to retain the trend in the current year as well. The bank is in stable financial position as it boasts of better than industry ratios for loan and lease provisions. The bank's gamble on Merrill Lynch is also paying well as its brokerage assets grew to $75.9 billion in 2012.

Citigroup Enters New Era with Mike Corbat

Citigroup's quarterly numbers were highly anticipated as it was the bank's first quarter under the new CEO. Citigroup's erstwhile CEO Vikram Pandit had been lauded for steering the bank through tumultuous times, but it seems like the ex-CEO took a couple of shortcuts for achieving these ends. The new CEO is now entrusted with the task of setting those wrongs right. Mike Corbat, the new captain of the ship, is looking to cut costs and while its cost-cutting targets are not as aggressive as Bank of America, still Citigroup is looking to pare down its costs by $900 million in 2013. While its Q4 numbers disappointed, but it was mainly due to conservative loan loss reserves and repositioning charges. The impact of these strategic changes will be visible in coming quarters only.

Both Citigroup and Bank of America are getting rid of loss making assets. While Bank of America is going conservative with its mortgage business, Citigroup is reducing its Citi Holdings assets. While both these banks are still struggling with their legacy issues, their overall financial robustness is constantly improving. Late last year, Citigroup's CFO also let it slip that the company is looking to return capital to its shareholders. In the short-term, Citi may have to see some tough time as it takes some stringent measures to ensure its long-term viability, but in the medium run, such measures are likely to bring forth positive results.

Footer:

  1. Citigroup Inc. Technical Analysis [ http://www.StockCall.com/CitigroupInc012313.pdf ]

About StockCall.com

StockCall.com is a financial website where investors can have easy, precise and comprehensive research and opinions on stocks making the headlines. Sign up today to talk to our financial analyst at http://www.stockcall.com  

SOURCE StockCall.com

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

IoT & Smart Cities Stories
To Really Work for Enterprises, MultiCloud Adoption Requires Far Better and Inclusive Cloud Monitoring and Cost Management … But How? Overwhelmingly, even as enterprises have adopted cloud computing and are expanding to multi-cloud computing, IT leaders remain concerned about how to monitor, manage and control costs across hybrid and multi-cloud deployments. It’s clear that traditional IT monitoring and management approaches, designed after all for on-premises data centers, are falling short in ...
The deluge of IoT sensor data collected from connected devices and the powerful AI required to make that data actionable are giving rise to a hybrid ecosystem in which cloud, on-prem and edge processes become interweaved. Attendees will learn how emerging composable infrastructure solutions deliver the adaptive architecture needed to manage this new data reality. Machine learning algorithms can better anticipate data storms and automate resources to support surges, including fully scalable GPU-c...
A valuable conference experience generates new contacts, sales leads, potential strategic partners and potential investors; helps gather competitive intelligence and even provides inspiration for new products and services. Conference Guru works with conference organizers to pass great deals to great conferences, helping you discover new conferences and increase your return on investment.
Poor data quality and analytics drive down business value. In fact, Gartner estimated that the average financial impact of poor data quality on organizations is $9.7 million per year. But bad data is much more than a cost center. By eroding trust in information, analytics and the business decisions based on these, it is a serious impediment to digital transformation.
SYS-CON Events announced today that Silicon India has been named “Media Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Published in Silicon Valley, Silicon India magazine is the premiere platform for CIOs to discuss their innovative enterprise solutions and allows IT vendors to learn about new solutions that can help grow their business.
We are seeing a major migration of enterprises applications to the cloud. As cloud and business use of real time applications accelerate, legacy networks are no longer able to architecturally support cloud adoption and deliver the performance and security required by highly distributed enterprises. These outdated solutions have become more costly and complicated to implement, install, manage, and maintain.SD-WAN offers unlimited capabilities for accessing the benefits of the cloud and Internet. ...
SYS-CON Events announced today that CrowdReviews.com has been named “Media Sponsor” of SYS-CON's 22nd International Cloud Expo, which will take place on June 5–7, 2018, at the Javits Center in New York City, NY. CrowdReviews.com is a transparent online platform for determining which products and services are the best based on the opinion of the crowd. The crowd consists of Internet users that have experienced products and services first-hand and have an interest in letting other potential buye...
Business professionals no longer wonder if they'll migrate to the cloud; it's now a matter of when. The cloud environment has proved to be a major force in transitioning to an agile business model that enables quick decisions and fast implementation that solidify customer relationships. And when the cloud is combined with the power of cognitive computing, it drives innovation and transformation that achieves astounding competitive advantage.
Founded in 2000, Chetu Inc. is a global provider of customized software development solutions and IT staff augmentation services for software technology providers. By providing clients with unparalleled niche technology expertise and industry experience, Chetu has become the premiere long-term, back-end software development partner for start-ups, SMBs, and Fortune 500 companies. Chetu is headquartered in Plantation, Florida, with thirteen offices throughout the U.S. and abroad.
DXWorldEXPO LLC announced today that "IoT Now" was named media sponsor of CloudEXPO | DXWorldEXPO 2018 New York, which will take place on November 11-13, 2018 in New York City, NY. IoT Now explores the evolving opportunities and challenges facing CSPs, and it passes on some lessons learned from those who have taken the first steps in next-gen IoT services.