US banks extend fall as investors assess executives’ sobering forecasts

USA-BANKS/STOCKS (UPDATE 2, PIX):UPDATE 2-US banks extend fall as investors assess executives' sobering forecasts

Reuters
Updated12 Sep 2024, 12:21 AM IST
US banks extend fall as investors assess executives' sobering forecasts
US banks extend fall as investors assess executives’ sobering forecasts

(Updates prices in paragraphs 5 and 7, adds detail from Goldman CEO's CNBC interview in paragraph 7)

By Pritam Biswas

Sept 11 (Reuters) - U.S. bank stocks fell on Wednesday, extending declines after top executives warned of a slower-than-anticipated recovery in investment banking and an expected hit to interest income from looming rate cuts.

The commentary has sparked concerns about the industry, which has been under stress since last year. It also comes at a delicate time for the economy as a slowdown in the labor market spooks investors.

"Investors are trying to reconcile a few moving parts that are both bullish and bearish," said David Wagner, portfolio manager and equity analyst at Aptus Capital Advisors.

"Rate cuts are expected to compress net interest income (NII)… but lower rates are also supposed to help boost spending. A tug of war has begun to see if growth can insulate the NII compression."

Bank of America, Citigroup and Wells Fargo fell between 1.3% and 2%. Morgan Stanley dipped 0.5%, while JPMorgan Chase was largely flat.

The comments overshadowed concessions made by the Federal Reserve, which has said it will water down a highly contested plan to raise big banks' capital.

Goldman Sachs shares turned positive and were last up marginally. In an interview with CNBC, the bank's CEO, David Solomon,

dismissed the notion

that its planned early exit from a credit card partnership with General Motors was "messy".

OVERLY OPTIMISTIC NII

JPMorgan led the declines on Tuesday with a 5.2% fall after President and Chief Operating Officer Daniel Pinto said forecasts for the bank's 2025 NII - the difference between what it earns on loans and pays out on deposits - were overly optimistic.

Rivals Wells Fargo and Citigroup had declined 1.2% and 2.7% respectively on Tuesday, while investment banks Morgan Stanley and Goldman Sachs each fell 1.6% and 4.4%.

Higher rates had boosted banks' loan income, but easing monetary policy would lead to smaller-than-expected increases.

Morgan Stanley has also forecast modestly lower interest income for the third quarter, with President Dan Simkowitz noting that mergers, acquisitions and initial public offering activities will remain below trends for the rest of the year.

Pinto expects JPMorgan's trading revenue to be flat or rise 2% in the quarter, while Goldman Sachs CEO David Solomon anticipates a probable 10% dip due to sluggish conditions in August.

Citigroup's CFO Mark Mason told investors at a conference in New York on Monday that markets revenue is likely to drop 4%.

The comments from executives of top U.S. banks overshadowed the Fed's revised plan to raise big banks' capital by 9%, down from 19%. (Reporting by Pritam Biswas and Niket Nishant in Bengaluru; Editing by Vijay Kishore, Sriraj Kalluvila and Maju Samuel)

Catch all the Business News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess
First Published:12 Sep 2024, 12:21 AM IST
Business NewsNewsUS banks extend fall as investors assess executives’ sobering forecasts

Get Instant Loan up to ₹10 Lakh!

  • Employment Type

    Most Active Stocks

    Axis Bank share price

    1,181.30
    03:29 PM | 4 OCT 2024
    5.85 (0.5%)

    Tata Steel share price

    166.75
    03:56 PM | 4 OCT 2024
    -0.2 (-0.12%)

    Oil & Natural Gas Corporation share price

    295.20
    03:58 PM | 4 OCT 2024
    3.1 (1.06%)

    Tata Motors share price

    930.70
    03:56 PM | 4 OCT 2024
    4.7 (0.51%)
    More Active Stocks

    Market Snapshot

    • Top Gainers
    • Top Losers
    • 52 Week High

    VIP Industries share price

    563.85
    03:57 PM | 4 OCT 2024
    40.8 (7.8%)

    Oil India share price

    572.25
    03:59 PM | 4 OCT 2024
    33.4 (6.2%)

    JK Paper share price

    489.95
    03:43 PM | 4 OCT 2024
    27.1 (5.86%)

    Home First Finance Company India share price

    1,245.35
    03:40 PM | 4 OCT 2024
    63.15 (5.34%)
    More from Top Gainers

    Recommended For You

      More Recommendations

      Gold Prices

      • 24K
      • 22K
      Bangalore
      77,575.000.00
      Chennai
      77,581.000.00
      Delhi
      77,733.000.00
      Kolkata
      77,585.000.00

      Fuel Price

      • Petrol
      • Diesel
      Bangalore
      102.86/L0.00
      Chennai
      100.85/L-0.03
      Kolkata
      104.95/L0.00
      New Delhi
      94.72/L0.00

      Popular in News

        HomeMarketsPremiumInstant LoanMint Shorts