Bank of America (BAC) and Citigroup (C) reported stronger-than-expected earnings early Thursday as bank shares continue to bear fruit from a recovering economy, growing investment activity and a shrinking exposure to credit losses. BAC stock and Citigroup rose early.
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Bank of America Earnings
Estimates: Analysts surveyed by Zacks Investment Research expect Bank of America earnings per share of 65 cents, a 63% gain over the previous quarter, on revenue of $ 21.91 billion.
Results: Bank of America’s earnings rose 115% to 86 cents a share with revenue of $ 22.9 billion. A $ 2.7 billion reserve release helped boost BofA earnings.
Consumer banking fell 12% to $ 8.1 billion. Wealth management increased by 1% to $ 5 billion. Global banking rose 1% to $ 4.9 billion as investment banking and underwriting fees hit a record high. Fixed income trading income increased by 22% to $ 3.3 billion and equity trading grew by 10% to $ 1.8 billion.
Bank of America also approved a $ 25 billion repurchase program.
StockShares rose 1.3% to 40.39 on the stock market today. According to MarketSmith’s chart analysis, BAC shares are expanding from a 34.47 buy point from a cup-with-handle base.
Bank of America’s relative strength line is rising, as bank shares enjoy a conversion into value stocks. Its RS rating is 76, slightly lower than the 80 that IBD recommends when evaluating stocks. Meanwhile, the EPS rating is only 59, as the company’s profits suffered during the pandemic.
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Citigroup earnings
Estimates: Citigroup’s earnings per share increased 142% to $ 2.56, while revenue is expected to decrease by 9% to $ 18.91 billion.
Results: EPS of $ 3.62 on revenue of $ 19.3 billion. Citi released $ 3.9 billion in loan loss reserves and left 13 overseas markets. These include consumer rights in Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.
“While the other 13 markets have excellent businesses, we do not have the scale we need to compete,” said CEO Jane Fraser.
Global consumer bank revenue fell 14% to $ 7 billion. Investment banking rose 46% to $ 2 billion. Fixed income trading fell 5% to $ 4.55 billion, while stock trading rose 26% to $ 1.48 billion.
Stock: Shares rose 3% to 75.14 early Thursday. Citigroup stock includes buy, ranging from a cup base with a buy point of 69.52. It has a follow-up point at 76.23 according to a four-week strict pattern. At the end of this week, the narrow pattern will be a flat base with a buying point of 76.23.
Citigroup’s relative strength has leveled off after declining over the past month. Its RS rating is 71, while the EPS rating is 54.
Wells Fargo (WFC), JPMorgan Chase (JPM) and Goldman Sachs (GS) on Wednesday reported the earnings that beat the view.
JPMorgan and Goldman received a boost from strong trading and investment banking revenues amid stock market volatility and an increase in new listings.
Morgan Stanley (MS) reported earnings Friday.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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