Finance

The Citibank building in Canada Square at the heart of Canary Wharf financial district in London on May 7, 2024.
Mike Kemp | In Pictures | Getty Images

Citigroup reported third-quarter results Tuesday that topped Wall Street expectations, with growth in investment banking and wealth management. However, the bank set aside more money to offset potential loan losses.
Shares of the bank were up 2% in premarket trading Tuesday.

Here’s what the company reported compared with what Wall Street analysts surveyed by LSEG were expecting:

Earnings per share: $1.51 vs. $1.31 expected
Revenue: $20.32 billion vs. $19.84 billion expected

Citigroup’s banking division reported 18% gain in revenue year over year, led by a 31% gain in its investment banking arm. Wealth revenue rose 9%.
Net income fell to $3.2 billion, or $1.51 per share, from $3.5 billion, or $1.63 per share, a year earlier. Earnings were hurt by a higher cost of credit, including a net build of $315 million in Citi’s allowance for credit losses.
Revenue rose 1% to $20.32 billion from $20.14 billion a year ago.
On the markets side, equity markets revenue rose 32% year over year, but fixed income revenue dipped 6%.

Citigroup CEO Jane Fraser took over in March 2021 and has focused on slimming down the bank during her tenure. That includes reducing Citigroup’s global presence and laying off workers. Investors will be looking for updates on Fraser’s turnaround plan during the analyst call later Tuesday morning.
“This quarter contains multiple proof points that we are moving in the right direction and that our strategy is gaining traction, including positive operating leverage for each of our businesses, share gains and fee growth,” Fraser said in the earnings release.
The CEO also said that the bank was on track to hit its full-year targets for expenses and revenue.
Shares of Citigroup were up more than 28% year to date through Monday, outperforming both the S&P 500 and the financial sector.
The other major banks that have reported third-quarter results so far have also beaten earnings expectations, including Goldman Sachs and JPMorgan Chase.

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Bank of America topped analyst estimates for third-quarter profit and revenue on better-than-expected trading results.
The bank said Tuesday that net income fell 12% from a year earlier to $6.9 billion, or 81 cents a share, on higher provisions for loan losses and rising expenses.
Net interest income fell 2.9% to $14.1 billion, edging out the $14.06 billion estimate.

Brian Moynihan, CEO of Bank of America
Heidi Gutman | CNBC

Bank of America topped analyst estimates for third-quarter profit and revenue on better-than-expected trading results.
Here’s what the company reported:

Earnings: 81 cents vs. 77 cents LSEG estimate
Revenue: $25.49 billion vs. $25.3 billion estimate

The bank said Tuesday that net income fell 12% from a year earlier to $6.9 billion, or 81 cents a share, on higher provisions for loan losses and rising expenses.
Revenue rose less than 1% to $25.49 billion as gains in trading revenue, asset management and investment banking fees offset a decline in net interest income.
Shares of the bank climbed 2.5% in premarket trading.
Bank of America, run by CEO Brian Moynihan since 2010, demonstrated the advantages of having a massive and diversified financial institution. Analysts have focused on the bank’s core activity of taking in deposits and lending to consumers and corporations as rising rates have squeezed the firm’s haul from interest income.
But the quarter showed that the bank also benefits from surging activity on Wall Street through its trading and advisory operations, just as rivals JPMorgan Chase and Goldman Sachs did.

Fixed income trading revenue rose 8% to $2.9 billion, topping the $2.74 billion StreetAccount estimate, on strength in currencies and interest rate activity. Equities trading jumped 18% to $2 billion, topping the $1.81 billion StreetAccount estimate, on higher cash and derivative volumes.
Investment banking fees also surged 18% to $1.40 billion, topping the $1.27 billion estimate from StreetAccount.
While net interest income fell 2.9% from a year earlier to $14.1 billion, that edged out the $14.06 billion StreetAccount estimate.
That NII figure in the third quarter was higher than in the second quarter, a sign that the trajectory for this key metric is improving. The lender said in July that a rebound in net interest income was coming in the second half of the year.
Bank of America “seems to be turning the corner on NII inflection,” though the degree is dependent on interest rates from here on out, Wells Fargo analyst Mike Mayo said Tuesday in a note.
NII, which is one of the key ways that banks make money, is the difference between what a bank earns on loans and investments and what it pays depositors for their savings.
The bank’s provision for credit losses in the quarter of $1.5 billion was slightly under the $1.57 billion estimate.
JPMorgan Chase and Wells Fargo on Friday posted earnings that topped estimates, helped by their investment banking operations. Goldman Sachs and Citigroup also reported results Tuesday, while Morgan Stanley will disclose earnings Wednesday.
This story is developing. Please check back for updates. More

The Dutch government on Tuesday said it will reduce its stake in lender ABN Amro by a quarter to 30% through a trading plan.
Governments have been capitalizing on a rebound in shares to sell their shareholdings in banks that were taken over during the financial crisis.

Jasper Juinen | Bloomberg | Getty Images

The Dutch government on Tuesday said it will reduce its stake in lender ABN Amro by a quarter to 30% through a trading plan.
Shares of the Dutch bank traded 1.2% lower at the market open and was last down 0.6% as of 9:15 a.m. London time.

The Dutch government, which currently holds a 40.5% interest in ABN Amro, announced via its investment vehicle firm NLFI that it will sell shares using a pre-arranged trading plan set to be executed by Barclays Bank Ireland.
In September, the government had said it sold shares worth about 1.17 billion euros, bringing its shareholding under 50%. It used part of the proceeds to pay off some of the state’s debts.
ABN Amro was bailed out by the state during the 2008 financial crisis and later privatized in 2015. The government started reducing its shareholding in the firm last year.
The lender came into state ownership “to ensure the stability of the financial system and not as an investment to make a return,” the Finance Minister Eelco Heinen said in a letter to parliament, reiterating previous statements on the government’s intentions.
In order to recoup what the government’s total expenditure, the entire remaining stake would have to be sold at a price of 31.49 euros per share, Heinen said in September, adding that it is “not realistic” that such a price will be achieved in the short term.

As of the Monday close, ABN Amro’s share price was 15.83 euros.

Rebound in shares

The banking sector has been in the spotlight of late, after UniCredit’s move to take a stake in German lender Commerzbank sparked questions on cross-border mergers in Europe and the lack of a complete banking union in the region.
Governments have been capitalizing on a rebound in shares to sell their shareholdings in banks that were taken over during the financial crisis. The U.K. and German administrations have both made moves this year to reduce their respective shareholdings in NatWest and Commerzbank.
ABN Amro was the subject of acquisition speculation last year, when media reports claimed French bank BNP Paribas was interested in the Dutch lender. At the time, BNP Paribas denied the reports. More

Federal Reserve Governor Christopher Waller on Monday signaled that future interest rate cuts will be less aggressive than the big move in September.
“Whatever happens in the near term, my baseline still calls for reducing the policy rate gradually over the next year,” he said.
Key data points for the Fed have been mixed in recent days.

Christopher Waller, a member of the Federal Reserve Board of Governors, during a Fed Listens event in Washington, D.C., on Sept. 23, 2022.
Al Drago | Bloomberg | Getty Images

Federal Reserve Governor Christopher Waller on Monday signaled that future interest rate cuts will be less aggressive than the big move in September as he expressed concern that the economy could still be running at a hotter-than-desired pace.
Citing recent reports on employment, inflation, gross domestic product and income, the policymaker indicated that “the data is signaling that the economy may not be slowing as much as desired.”

“While we do not want to overreact to this data or look through it, I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting,” Waller said in prepared remarks for a conference at Stanford University.
The Federal Open Market Committee at its September meeting took the unusual step of lowering its baseline interest rate by a half percentage point, or 50 basis points, to a target range of 4.75% to 5.00%. In the past, the Fed has only done that during times of crisis, as it prefers to move in increments of a quarter percentage point, or 25 basis points.
Along with the cut, officials indicated the likelihood of another half point lopped off in the final two meetings of 2024, along with another full percentage point of cuts in 2025. However, Waller did not commit to a specific path ahead.
“Whatever happens in the near term, my baseline still calls for reducing the policy rate gradually over the next year,” he said.
Key data points for the Fed have been mixed in recent days. The labor market posted stronger numbers in September after weakening through the summer, the consumer price index inflation gauge was slightly higher than expected and GDP also has held strong.

In the final revision for second-quarter growth, the Commerce Department also punched up the level of gross domestic income gain to 3.4%, an adjustment of 2.1 percentage points from the previous estimate and closer in line with GDP. The savings rate also was adjusted much higher, to 5.2%.
“These revisions suggest that the economy is much stronger than previously thought, with little indication of a major slowdown in economic activity,” Waller said.

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Why are some countries rich and others poor? The question, full of childlike curiosity, is the most important in economics. A person’s living standards are mostly determined not by talent or hard work, but by when and where they were born. Historically, most models of economic growth focused on the accumulation of factors of production, labour, capital and, more recently, technology or ideas. The greater the capital stock per worker and the more productive its use, then the richer a country would be. Yet that still left a gap: why did some countries manage to accumulate more of these factors than others? More

Warren Buffett walks the floor and meets with Berkshire Hathaway shareholders ahead of their annual meeting in Omaha, Nebraska on May 3rd, 2024. 
David A. Grogan

Warren Buffett’s Berkshire Hathaway continued to increase its stake in SiriusXM, now owning 32% of the New York-based satellite radio company.
The Omaha, Nebraska-based conglomerate purchased roughly 3.6 million shares for about $87 million in separate transactions Wednesday through Friday, according to a filing with the Securities and Exchange Commission late Friday.

Berkshire hiked its bet after billionaire John Malone’s Liberty Media completed its deal in early September to combine its tracking stocks with the rest of the audio entertainment company. It was part of Malone’s reshuffling of his sprawling media empire that also included a split-off of the Atlanta Braves baseball team into a separate, publicly traded company, which Berkshire also owns shares in.
Buffett’s firm first bought Liberty Media’s trackers in 2016 and started piling into SiriusXM’s tracking stocks in the beginning of 2024 after the deal announcement in a likely merger arbitrage play.
The 94-year-old has never mentioned the bet publicly, and it’s unclear if he’s behind it or if it’s the work of the billionaire’s investing lieutenants, either Ted Weschler or Todd Combs.
Not well loved
SiriusXM, which has been grappling with subscriber losses and unfavorable demographic shifts, is not a popular stock on Wall Street. Out of the 14 analysts covering the name, only five gave it a buy rating, according to FactSet.
JPMorgan analyst Sebastiano Petti reopened coverage of SiriusXM with an underweight rating last week, citing concerns about the radio giant’s long-term growth and its ability to successfully target a broader demographic.

Meanwhile, the Liberty transaction, which reduced share count by 12%, could cause the company to pause stock buybacks until 2027, which will likely weigh on shares, the analyst said.

Stock chart icon

The stock popped 8% on Monday on Berkshire’s disclosure. However, the shares are still down more than 50% this year.
The last time Berkshire invested significantly in a major media company was in 2022, when the conglomerate bought a nonvoting stake in Paramount Global’s Class B shares. The investment soured quickly. Buffett revealed in May this year that he had exited the entire stock at a big loss.
Buffett said the unfruitful Paramount bet made him think more deeply about what people prioritize in their leisure time. He previously said the streaming industry has too many players seeking viewer dollars, causing a stiff price war.

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Nothing changes sentiment like price, according to one investing maxim. The world-weary saying reflects the fact that after a stockmarket surge speculators usually scramble for reasons to believe further price rises are on the way. The recent surge in the Chinese market is one such example. More

There was no disruption to trading and none of the protestors appeared to make it to the historic trading floor.
NYSE security fences off a perimeter area outside of the exterior of the building on Broad Street in lower Manhattan.
Chants such as “we want housing, not genocide” and “let Gaza live” could be heard in a livestream on social media platform X.

Pro-Palestinian protesters stage a demonstration outside New York Stock Exchange building in New York, United States on October 14, 2024. 
Fatih Aktas | Anadolu | Getty Images

A pro-Palestinian protest erupted outside of the New York Stock Exchange on Monday. There was no disruption to trading and none of the protestors appeared to make it to the historic trading floor.
NYSE security fences off a perimeter area outside of the exterior of the building on Broad Street in lower Manhattan. According to video shared on social media, the group, representing Jewish Voices for Peace, broke into that area and protestors were chaining themselves to the security fence and some exterior doors. Some of the protestors were arrested and being carried away in zip ties, the videos showed.

The exchange was limiting entry to the building because of the protests. NYPD was removing the final people inside the exterior security gate midday. There were still people outside the exterior gate.

Officers from New York Police Department detain some protesters and intervene in the Pro-Palestinian demonstration outside New York Stock Exchange building in New York, United States on October 14, 2024. 
Fatih Aktas | Anadolu | Getty Images

Chants such as “we want housing, not genocide” and “let Gaza live” could be heard in a livestream on social media platform X.
“As Gaza is bombed, Wall Street booms,” Jewish Voices for Peace said in a post on X Monday. “The stock prices of weapons manufacturers have skyrocketed this year. The U.S. war economy is profiting from genocide.” 

Officers from New York Police Department detain some protesters and intervene in the Pro-Palestinian demonstration outside New York Stock Exchange building in New York, United States on October 14, 2024.
Fatih Aktas | Anadolu | Getty Images

The NYSE has declined to comment.
The protest followed the ongoing bloodshed in the Israeli-Palestinian conflict, triggered by Hamas’ attack on southern Israel just more than a year ago. Israel has since carried out military assault on Gaza. The NYSE has had heavy security in place since the 9/11 attacks on the World Trade Center buildings nearby.
— CNBC’s Bob Pisani contributed reporting.

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