Bank Stock Roundup: Wells Fargo, Citi In Focus For Legal Matters & Restructuring Plans
Zacks Investment Research | May 27, 2016 02:14AM ET
Over the last five trading days, performance of the major banking stocks was bullish as lower than expected April trade deficit level, which is likely to drive up Q2 GDP and positive momentum in oil prices, reinforced the chances of the rate hike in June. Rise in the interest rates will support top-line growth for banks, paving the way for improved results in the upcoming quarters.
Coming to the industry-specific developments, legal matters dominated the headlines. Banks continue to be penalized for past business malpractices. Though they are fully reserved to meet these charges, such fines taint their brand image to some extent.
However, in a very rare occurrence, Bank of America Corp. (NYSE:C) was able to win a case against regulators, leading to the dismissal of fines. Though this is a setback for the U.S. government, it is definitely going to set precedence for other banks to challenge regulatory fines.
Additionally, slide in oil prices in the past few quarters had a significant adverse impact on the banks’ balance sheet. Hence, higher provisions are still likely in the upcoming results, despite rise in oil prices. Further, streamlining and restructuring activities persisted over the last five trading days.
(Read: Zacks Investment Research
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