Fly Intel: What to watch in next round of big bank earnings reports - InvestingChannel

Fly Intel: What to watch in next round of big bank earnings reports

Bank of America (BAC) and Citigroup (C) are scheduled to announce quarterly results before the open on April 15, while Morgan Stanley (MS) is expected to report earnings on April 16. What to watch for: 1. OUTLOOK: During the company’s last earnings call, Bank of America said it sees card losses higher in the first quarter and declining in the second quarter. The bank also said first quarter NII may be flat versus the fourth quarter. Back in January, Citi said it sees a fiscal year 2021 decline in net interest revenues between $1B-$2B and that credit should be “meaningfully lower” in 2021 versus 2020. The bank also sees operating margin pressure in 2021, improvement in profitability in 2021 versus 2020, and client engagement “remaining strong.” Citi also noted that it expects fiscal year 2021 revenue to be down mid-to-high single digits, and fiscal year 2021 expenses up 2%-3%. 2. DEPOSIT GROWTH ‘WILL SHINE’: Jefferies analyst Ken Usdin raised the firm’s price target on Bank of America to $41 from $33, while keeping a Hold rating on the shares ahead of earnings reporting season for the banks. The analyst also raised his price target on Citi to $85 from $75, with a Buy rating on the name. Usdin believes deposit growth “will shine” for the group in the first quarter, helped by stimulus, and he would expect more reserve releases this quarter given the improving economic backdrop. 3. NO BLOCKS LEFT: According to a tweet by CNBC’s Leslie Picker on March 29, Morgan Stanley has no blocks left after $15B sold in prior days. “Morgan Stanley has been telling investors it sold $15 billion worth of blocks in the last few days; it has no more blocks to do, and the firm has not incurred significant losses as a result of these transactions, according to a source with knowledge of the matter,” Picker said. 4. DIVIDENDS, SHARE REPURCHASES: The Federal Reserve Board announced that the temporary and additional restrictions on bank holding company dividends and share repurchases currently in place will end for most firms after June 30, after completion of the current round of stress tests. Companies with capital levels above those required by the stress test will no longer be subject to the additional restrictions as of that date. Companies with capital levels below those required by the stress test will remain subject to the restrictions.