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Bank Stock Roundup: Ambiguity Over Trade War Remains, SunTrust & Citi in Focus

Zacks Equity Research

Performance of major bank stocks suggests a bleak picture over the last five trading sessions. Continued ambiguity over trade conflict and several other geopolitical matters weighed on investor sentiment. Moreover, slowdown in business investment has negatively impacted banking activities.

Mortgage rates increased last week, hitting 3.75%, on decline in recession fears. Despite this, investors are apprehensive about parking funds in the housing market, thanks to the volatility in the financial world.

Notably, mortgage applications increased 9.6% last week, per the latest data from the Mortgage Bankers Association. In addition, the refinance share of mortgage activity came in at 61.9% of all applications.

Talking about company-specific headlines, banks continued with restructuring and streamlining initiatives. These efforts are anticipated to attract more business and support revenue growth. Further, with technology advancement, increase in digital offerings by major banks was at the peak.


(Read: Bank Stock Roundup for the Week Ending Oct 25, 2019)

Important Developments of the Week

1. Citigroup C is likely to join forces with tech-giant, Google, to help the latter offer consumer checking accounts. In other words, clients will be able to access their personal bank accounts through the Google Pay app. The plan is to launch this service from 2020. Google is also partnering with Palo Alto-based Stanford Federal Credit Union. Both Citigroup and Credit Union will be responsible for the fulfillment of financial and compliance requirements. (Read more: Citi to Enable Google Pay Customers to Access Bank Accounts)

2. SunTrust Banks STI has announced a deal to divest 30 branches across North Carolina, Virginia and Georgia to First Horizon National Corp. FHN. The transaction, expected to close early next year, is still subject to regulatory approvals. As part of the deal, First Horizon will assume deposits worth nearly $2.4 billion for a premium of 3.40%, and roughly $410 million in loans. This branch divestiture is part of the Department of Justice’s (“DOJ”) conditional approval for SunTrust’s “merger of equals” deal with BB&T Corp. BBT. (Read more: SunTrust to Sell Branches, Gets DOJ Nod for BB&T Merger Deal)

3. U.S. Bancorp USB recently announced an additional share-repurchase program of up to $2.5 billion, following the Fed’s approval. This adds to June’s buyback authorization of up to $3 billion, which commenced on Jul 1. The company intends to make these repurchases through Jun 30, 2020. (Read more: U.S. Bancorp Announces Additional Share Buyback of Up to $2.5B)

Price Performance

Here is how the seven major stocks performed:

Company

Last Week

6 months

JPM

-1.4%

18.3%

BAC

-1.7%

15.6%

WFC

-1.1%

17.5%

C

-3.0%

14.8%

COF

-0.6%

9.2%

USB

-0.6%

16.4%

PNC

-2.1%

16.7%



Over the last five trading sessions, Citigroup and PNC Financial PNC were the major losers, with their shares decreasing 3% and 2.1%, respectively. Moreover, shares of Bank of America BAC fell 1.7%.

In the past six months, shares of JPMorgan JPM and Wells Fargo WFC have appreciated 18.3% and 17.5%, respectively. Further, shares of PNC Financial have gained 16.7%.

What’s Next?

Over the next five trading days, performance of bank stocks will likely remain the same unless any unexpected event occurs.

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U.S. Bancorp (USB) : Free Stock Analysis Report
 
Wells Fargo & Company (WFC) : Free Stock Analysis Report
 
SunTrust Banks, Inc. (STI) : Free Stock Analysis Report
 
The PNC Financial Services Group, Inc (PNC) : Free Stock Analysis Report
 
BB&T Corporation (BBT) : Free Stock Analysis Report
 
Citigroup Inc. (C) : Free Stock Analysis Report
 
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
 
Bank of America Corporation (BAC) : Free Stock Analysis Report
 
First Horizon National Corporation (FHN) : Free Stock Analysis Report
 
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Zacks Investment Research