Bank of America – Citi Results Challenges

Bank of America and Citigroup shares fell as the result of the slow recovery of the Bank of the United States and the potential economic costs of regulation, the struggle against profits in the quarter on better underlined lower than expected loan losses.

After JPMorgan Chase & Co. on Thursday, the banks, said Friday that benefits the investment bank fell by 20-40 percent in the first quarter because of trading after the accident flash dried and the European debt quandary. There is present a dark mark on Goldman Sachs Group Inc. and Morgan Stanley, a report on Tuesday and Wednesday.

Revenues in the General Conditions of the Bank of America and Citigroup a year ago, and how its competitors are grappling with how their companies are established by the bill of the financial reform of the U.S. Congress adoptee be affected.

Executives from Bank of America Corp. and Citigroup Inc. has announced that the impact of the bill was undefined.

In a presentation to analysts, said Bank of America the cost of the reform of credit of U.S. $ dollars this year, changes in service fees and additional costs, costs could range from to $ 2000000000 years, while the reform of debit cards could cost up to $ 2300000000th The Bank also reported a load as large as goodwill of $ 10000000000 this quarter because of the new pricing rules of the debit card.

Citi executives, such as JPMorgan said on Thursday that he was able to quantify the potential cost to your business.

The banks will make money and cut costs wherever they can and try to do more than the loss of income of the financial reform, said Nancy Bush, analyst at NAB Research.

It will be this way for years, he said. It is a very hard environment. Unemployment hovers around 10 percent and the United States, a report on Friday showed that consumer confidence fell to a low of nearly a year in July.

The shares of Bank of America, the largest U.S. bank by assets, fell the most in more than a year, a decline of 9 percent to $ 13.98, deleting more than $ 10,000,000 market capitalization 154.5 billion on Wednesday. Citigroup, the No. 3 behind JP Morgan, was decreased by more than 6 percent to $ 3.90. Bank of America and Citigroup were the two most traded shares on early Friday.

The shares of Wells Fargo & Co. No. 4, which in print its results on Wednesday, fell by 5.7 percent to $ 26.24. The KBW banks fell by 5.7 percent.

Bank of America and Citigroup, said the cost of credit is usually dropped in the second quarter, so they place less money aside in case of future losses brought. Bank of America and Citi both released on 1.2 million after tax, or about 38 percent and 43 percent of their income, respectively.

Both reports a significant improvement in credit standing, but small in the way we spend the income growth, said Marshall Front, chairman of Front Barnett Friends.

Loans from the Bank of America has dropped nearly $ 20,000,000, or 2 percent to 956 billion U.S. dollars over the first quarter, while total loans Citi fell over 30 billion U.S. dollars or 4 percent to 692, $ 2,000,000,000. Analysts and investors expressed concern about the opinions of the executives of the banks credit demand is still weak.

I have seen a fantastic demand in the small term, at least until the uncertainty is lifted, said Citigroup Chief Financial Officer John Gerspacher, during a talks call with journalists.

To increase revenue without recourse to the reduction in provisions for losses, the banks tend to increase cost savings, said Bush.

Moynihan, the new CEO of Wall Street, has about Kenneth Lewis earlier this year and was usually praised for his work in the bank. He worked on a renewal of relations with investors and regulators, the relationship during the financial quandary and a probe Bank of America takeover of Merrill Lynch & Co Inc were strained

Bank of America also reported 1100000000 dollar profit before tax from the sale of stakes in two banks in Latin America. Citigroup reduced its portfolio of assets for point terrible assets such as subprime housing 38000000000 $. The contrivance, such as Citi Holdings, which now accounts for less than a quarter of the balance of Citigroup known.

In recent quarters, the banks of their shares of investment banking services have relied on to perform well, while its consumer business has been affected by higher losses. Now the stock markets, consumer credit losses are less disturbing, suffered trading revenues were affected by an accident Flash in the U.S. and the problems of public debt in Europe.

Revenues in investment banking arm of Bank of America fell to $ 6000000000 in the second quarter of $ 9800000000 in the first quarter. Much of this decline is fixed income, currencies and commodities were trading, fell by 58 percent, or $ 3200000000-2300000000. Citigroup also said in its securities and banking fell by 26 percent over the first quarter to U.S. $ six billionth

These units have also been paid by a tax of the bankers of bonds in the United Kingdom affected. The tax will cost it seems that the five largest U.S. investment banks in London, with approximately $ 2,500,000 in total.

Bank of America, which bought investment bank Merrill Lynch & Co. late 2008 saw the unity of the brokerage Merrill Lynch profits fall by 12 percent and assets below management fell by 3 percent.