Aurelia Butler

NEW YORK (Reuters) – Citigroup (NYSE:C)’s profit was broadly steady and beat third-quarter estimates as it benefited from rising interest payments and surging investment banking fees, sending its shares up 3% in premarket trading on Friday.CFO Mark Mason said in a call with reporters that the reorganization plan will result in a 15% reduction in functional roles for its top two layers of management. The first phase of the plan eliminated 60 net committees, the bank said. Citi’s net income rose 2% to $3.5 billion from a year ago, while earnings per share remained stable at $1.63. On an adjusted basis, it earned $1.52 to beat LSEG estimate of $1.21.Revenue at Citi’s institutional clients group that houses its Wall Street operations rose 12% from a year ago, fueled by a 34% jump in investment banking fees. The gains were a bright spot after several quarters of depressed dealmaking. The bank’s trading unit also boosted revenue, while its division providing treasury and securities services to corporations brought in 12% more revenue. Revenue from fixed income trading grew 14% to $3.6 billion, which more than offset a 3% drop in equities trading revenue.Citi’s overall revenue climbed 9% to $20.1 billion. The third largest U.S. lender set aside more money to cover potential bad loans, even though delinquency levels were still low compared to historical levels. Citi’s total provision for the credit portfolio rose to $17.6 billion from $16.3 billion a year ago.At the same time, lenders have benefited from the Federal Reserve’s campaign to quell inflation, which has increased borrowing costs and helped banks earn more from customer interest payments. Revenue for the personal banking and wealth management division jumped 10% to $6.8 billion. Deposits at the end of the third quarter came in at $1.3 trillion, down 3% from a year ago as customers moved to high-yielding assets. Fraser announced a sweeping reorganization last month that will disband ICG and give her more direct oversight over the company’s businesses. The new structure is not yet reflected in the third-quarter results. “We announced consequential changes that align our organizational structure with our strategy and changes how we run the bank,” CEO Jane Fraser said in a statement. “When completed, we will have a simpler firm that can operate faster, better serve our clients and unlock value.”Citi has not yet announced the expected headcount reduction and savings with the reorganization that will reduce management layers and prompt layoffs across its businesses. Fraser has said there was “no room for bystanders” as the bank embarked on its biggest overhaul in almost two decades. The changes are being rolled out at a time of economic uncertainty that has weighed on some of Citi’s key businesses like trading. Expenses rose 6% to $13.5 billion due to rising costs and investments in control systems. The expenses included severance payments for employees who were laid off during the sale of its international businesses.Rivals Wells Fargo and JPMorgan Chase (NYSE:JPM) also reported higher quarterly profit on Friday, boosted by a rise interest payments. More

In its quarterly economic bulletin the Bank of Italy cut this year’s growth projection sharply from a previous 1.3% forecast, reflecting an unexpectedly weak second quarter when gross domestic product fell 0.4% from the previous three months.Next year’s forecast of 0.8% GDP growth is trimmed only marginally from a previous 0.9%.The downgrades come as Giorgia Meloni’s government prepares to present a tax-cutting 2024 budget on Monday, having last month increased its targets for the budget deficit this year and next.The government is forecasting growth of 0.8 for 2023 and 1.2% next year.The central bank said its new projections carried downside risks connected to “intensifying geopolitical tensions, the weakening of the Chinese economy and tighter credit conditions in Italy and the euro zone.”It forecast Italy’s average inflation rate, based on the EU-harmonised HICP index, at 6.1% this year and at 2.4% in 2024.The forecasts were up marginally from its July projections of 6.0% and 2.3% respectively. More

NEW YORK (Reuters) – Federal Reserve Bank of Philadelphia President Patrick Harker said Friday he believes the central bank is likely done with rate hikes amid an ongoing waning in price pressures. “Absent a stark turn in what I see in the data and hear from contacts,” Harker said in a speech text, “I believe that we are at the point where we can hold rates where they are.” “It will take some time for the full impact of the higher rates to be felt,” the official said, adding “holding rates steady will let monetary policy do its work,” and as monetary policy is now restrictive, “we will steadily press down on inflation and bring markets into a better balance.” “By doing nothing, we are still doing something,” Harker said, adding “we are doing quite a lot.”Harker weighed in as markets are actively debating whether the Fed will raise rates again. At their policy meeting last month officials held their overnight target rate range steady at between 5.25% and 5.5% amid softening inflation pressures. They also penciled in one more increase this year and projected their target will stay higher for longer than they expected at the start of the summer. Harker noted he supports the Fed’s longer-range expectations for monetary policy, while flagging the uncertainty of how long rates will need to remain elevated. Recent data, while showing strength, has driven home to many in markets the prospect the Fed is done, and a number of Fed officials, pointing to higher bond yields, which make credit more expensive and a greater headwind to growth, have signaled they could also be done with hikes. In his speech, Harker was upbeat about the economy while pointing to a series of risks, noting “disinflation is under way. Economic activity has been resilient. Labor markets are coming into better balance.” Harker said he sees a “steady disinflation” that will take price pressures below 3% this year and to 2% after that. He said he expects growth to continue this year but at a slower pace next year, adding “even as I foresee the rate of GDP growth moderating, I do not see it contracting. I do not anticipate a recession.”In his remarks, Harker noted labor strikes and the restart of student loan payments could weigh on the economy. He said the jobless rate will likely rise a touch to about 4% while adding he does not see mass layoffs coming. More

(Reuters) -Wells Fargo beat analysts’ third-quarter profit estimates and raised its annual forecast for income from interest payments on Friday, as customers paid more to borrow. The fourth-biggest U.S. bank now expects 2023 net interest income (NII) – the difference between what it earns on loans and pays out on deposits – to climb about 16% from a year earlier, compared with a previous forecast of 14%. Although the swiftest tightening of U.S. monetary policy in 40 years, aimed at reining in persistent inflation, has buoyed interest income, bank executives sounded a note of caution.”While the economy has continued to be resilient, we are seeing the impact of the slowing economy with loan balances declining and charge-offs continuing to deteriorate modestly,” Wells Fargo CEO Charlie Scharf said in a statement.Wells Fargo shares rose 2% in premarket trading after its results, which showed the bank’s NII climbed 8% to $13.1 billion in the third quarter. Rival banking giant JPMorgan Chase (NYSE:JPM)’s profit surged in the third quarter as higher interest rates boosted its income from loans, it reported earlier Friday. Citigroup (NYSE:C)’s profit was broadly steady as it benefited from rising interest payments and surging investment banking fees.Excluding items, Wells Fargo earned $1.39 per share in the third quarter, beating analysts’ expectations of $1.24 per share, according to LSEG estimates.The bank posted a decline in total deposits to $1.34 trillion from $1.41 trillion a year earlier. As interest rates rose, some customers have moved their cash into money market funds in search of higher yields. Deposits have also been in focus after customers precipitated the collapse of three regional lenders earlier this year by rushing to pull out their money. ‘SEEING WEAKNESS’ Wells Fargo, which is working to fix a six-year-old scandal over sales practices, said provision for credit losses in the quarter included a $333 million rise in the allowance for credit losses, primarily for commercial real estate office loans.”The office portfolio, in particular in the commercial real estate sector, is the place where we’re seeing weakness,” Wells Fargo’s finance chief Michael Santomassimo told reporters on an earnings call.”We do expect to see some losses there over time, but we haven’t seen anything significant yet,” he added.The bank made a $359 million allowance for credit losses on the office segment of commercial real estate, bringing total allowances to $2.6 billion for the first nine months of 2023.U.S. lenders generally are anticipating weakness in commercial real estate (CRE), particularly in office loans. Financing costs have risen for many CRE owners whose buildings have higher vacancies as more employees opt to work from home. Wells Fargo’s quarterly revenue of $20.86 billion also comfortably topped expectations of $20.11 billion.The bank also raised its 2023 expense forecast to about $51.5 billion, up from an earlier estimate of about $51 billion.Despite U.S. proposals that would require Wells Fargo to raise its capital levels, the bank said it aims to return more capital to shareholders. More

The job cuts would reduce its personnel expenses by about $325 million, or 5%, annually, the Pittsburgh-based bank said.Shares of the bank were up 1.1% in premarket trade.For the three months ended Sept. 30, PNC reported a 5.7%, decline in revenue to $5.23 billion, missing the Street estimate of $5.32 billion.Average deposits at PNC fell 3.8% to $422.5 billion, compared with $439.2 billion a year earlier. The lender earned a profit of $1.57 billion, or $3.60 per share, compared to $1.64 billion, or $3.78 per share. Analysts had estimated a profit of $3.11 per share, according to LSEG IBES data.PNC said it expects a drop of 1% to 2% in its net interest income (NII)- the difference between what banks earn from lending and pay out on deposits – for the fourth quarter from the preceding quarter. In the third quarter, it posted a drop of 1.6% in NII from a year earlier. Some lenders have been cautioning about a weakness in NII growth as borrowing costs surge, dissuading customers from applying for loans, especially as the central bank keeps rates higher for longer. PNC set aside $129 million as provisions for credit losses, compared to $241 million a year earlier.Its banking division said earlier this month that it had purchased a portfolio of capital commitments from Signature Bridge Bank for $16.6 billion in an arrangement with the Federal Deposit Insurance Corp as receiver. More

(Reuters) -Wall Street’s main stock indexes eyed a mixed open on Friday as investors assessed earnings from big U.S. banks, while Treasury yields eased following a spike in the previous session.JPMorgan Chase (NYSE:JPM) rose 1.1% in premarket trading after beating expectations for third-quarter profit as a tighter monetary policy and the acquisition of failed First Republic Bank (OTC:FRCB) drove the lender’s interest income to a record high.Wells Fargo gained 2.5% after beating third-quarter profit estimates, while Citigroup (NYSE:C) rose 2.3% after the bank said its quarterly profit was broadly steady as it benefited from rising interest payments and surging investment banking fees.”The market will likely breathe a sigh of relief as the solid Citi numbers chime with the good results from JPMorgan and Wells Fargo too, and will go some way toward suggesting that the worst of the banking crisis is now over,” said Stuart Cole, chief macro economist, at Equiti Capital.”But next year may prove to be more difficult, when the Fed is expected to start cutting rates again and there are still fears remaining over whether the U.S. will avoid a period of negative growth.”Asset manager BlackRock (NYSE:BLK) dipped 1.8% after posting a sharp drop in net inflows in the third quarter.Options traders are bracing for larger-than-usual post-earnings stock price swings for some U.S. banks, despite signs of cooling volatility in broader markets, options data showed.UnitedHealth (NYSE:UNH) advanced 1.2% after beating third-quarter profit estimates, helped by a lower-than-feared rise in medical costs at the company’s health insurance unit.Keeping a lid on gains, megacap stocks Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Tesla (NASDAQ:TSLA), Meta Platforms (NASDAQ:META) and Nvidia (NASDAQ:NVDA) dipped between 0.3% and 0.8%.U.S. stocks registered their first decline in five days on Thursday as yields rose after consumer inflation data and weak demand in the auction of U.S. 30-year bonds.Yields, however, eased on Friday, and the three main U.S. stock indexes were on track to register gains for the week.Investors will look out for comments from Philadelphia Fed President Patrick Harker later in the day.A preliminary estimate of the University of Michigan’s October consumer sentiment index is due at 10 a.m. ET.At 8:23 a.m. ET, Dow e-minis were up 30 points, or 0.09%, S&P 500 e-minis were down 2.75 points, or 0.06%, and Nasdaq 100 e-minis were down 48.25 points, or 0.32%.Investors also kept an eye on the conflict in Israel. The country’s military has called for all civilians of Gaza City, more than 1 million people, to relocate south within 24 hours, as it amassed tanks ahead of an expected ground invasion after a devastating attack by the militant group Hamas.Energy companies Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Callon (NYSE:CPE) Petroleum and Occidental Petroleum (NYSE:OXY) rose between 1.3% and 3.0%, tracking a near 4% jump in crude oil prices.Dollar General (NYSE:DG) added 7.2% after the discount store retailer brought back former CEO Todd Vasos to replace Chief Executive Jeffery Owen.Boeing (NYSE:BA) lost 2.4% after the planemaker and Spirit AeroSystems (NYSE:SPR) expanded the scope of their ongoing inspections of a production defect affecting 737 Max 8 aircraft. Spirit’s shares were down 4.7%.Netflix (NASDAQ:NFLX) fell 1.8% on a report Wolfe Research downgraded the streaming service’s shares to “peer perform”. More