Bank Stock Roundup: Investor Confidence Shaken, COF & WFC In Focus
Zacks Investment Research | Nov 10, 2017 01:33AM ET
Over the last five trading days, the performance of banking stocks has been bearish. Expected delays in corporate tax reform and a flattening of the yield curve drove investor pessimism over bank stocks.
Earlier this week, Democrats won elections in Virginia and New Jersey, which indicates increased prospects for their representatives in next year's midterm elections. This development increases investor apprehension, as this might challenge Republicans' plans of lessening regulations for banks. Expected weakness in economic numbers also added to the woes.
Mortgage rates declined this week, hitting 3.9%, awaiting tax-reform results. Notably, concerns rose after the message sent by Republicans last week, “We think homeowners and home buyers have gotten much too sweet a deal from the federal tax code for far too long — and now we’re going to whack them down.”
Nevertheless, strategies to enhance profitability through streamlining operations and increased digital offerings persisted over the last five trading days.
(Read: Bank Stock Roundup for the week ending Oct 27, 2017 )
Important Developments of the Week
1. Amid ongoing restructuring in the banking sector to propel revenues and reduce costs, recently Capital One Financial Corp. (NYSE:C) announced it will stop originating mortgage and home equity loans, as heightened competition has made it difficult to remain profitable. The bank will lay off 950 employees as a result of its exit from this business.
However, the company will continue to service its existing home loans. Capital One is also closing a call center that employs about 200 workers, as they have experienced a decline in call volume with customers being more comfortable with its mobile app and other modes of communication with the bank. The call center will be functional till summer 2018. (Read more: Zacks Investment Research
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