Big bank shares are dropping in pre-market trading, with Citigroup down about 1.7 per cent and Wells Fargo sinking 3.2 per cent. Wells Fargo is once again the ugliest of the big banks, after loans and deposits fell as the Federal Reserve’s asset cap started to bite. Citigroup second-quarter EPS beat, helped by a drop in the share count after buybacks, although fixed income markets revenue missed estimates and the cost of credit rose.
JPMorgan is hanging on to pre-market gains of about 0.3 per cent, after the bank reported better-than-estimated FICC sales and trading revenue.
"In the shadow of rival JPMorgan, Citigroup’s results pale in comparison," Opimas CEO Octavio Marenzi says in a note. "The bank’s growth in earnings was almost entirely driven by a lower corporate tax rate, rather than Citi’s underlying operations. Citigroup’s revenue growth was tepid at only 2 per cent."
Marenzi adds that "the broad-based weakness of Wells Fargo’s results is troubling, with many indicators such as deposits, commercial and consumer lending trending down. It appears that the slew of scandals that Wells Fargo has been involved in are taking their toll."
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