US banks, facing penalties from bad behavior amid a tougher regulations, are still grappling with the new financial landscape created by the financial crisis.
This week, the six largest banks in the US update investors on their progress with their fourth-quarter and year-end results. JP Morgan Chase and Wells Fargo are set to kick off quarterly earnings tomorrow; Bank of America checks in on January 15; Citigroup and Goldman Sachs are scheduled to disclose their results on January 16; and Morgan Stanley on January 17 will cap off the week. Here is what industry observers will be looking at as they search for signs about the direction and health of the banking system:
- After paying more than $22 billion to settle legal claims, Wall Street wants to know that the worst is over for CEO Jamie Dimon’s fine-riddled New York financial institution. JPMorgan isn’t likely to offer any new disclosures about new legal woes but investors may home in on the bank’s fundamental revenue performance as the biggest banks wrestle with generating growth in core businesses like mortgages, credit cards and loans.
- The San Francisco, California bank, originates one out of every three US home loans, making it the biggest US mortgage lender. Market watchers will be looking to see how much increasing interest rates, already a problem for the bank, have hamstrung its revenues.
Bank of America:
- Much has been made over JPMorgan’s billion-dollar penalties, but Bank of America, after averaging $10 billion a year in fines over CEO Brian Moynihan’s four-year tenure, has to prove that it is through with the lion’s share of its legal claims as well.
- After the tenure of relatively new CEO Michael Corbat began in October 2012, the bank has seen its shares up by more about 46%. But industry observers will be interested to see how much more the bank has reduced its so-called bad bank known as Citi Holdings, which contains assets segregated by the Citi to help it respond to the financial crisis.
- An uncharacteristically poor third-quarter, particularly in the bread-and-butter unit responsible for the sale of bonds and other fixed-income products, has observers wondering if the global investment bank headed by Lloyd Blankfein has lost its mojo.
- An aggressive plan to reshape the storied investment bank into a wealth management focused institution has taken shape, but at what cost? Market watchers want to know if James Gorman can maintain a serviceable trading operation while decreasing risk and facing the departure of swashbuckling traders like Glenn Hadden.