Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C) have predicted a decline in trading revenue for the fourth quarter, as per presentations from the two firms’ CEOs in an investor conference in New York on Tuesday.
Bank of America Corp (NYSE:BAC) CEO Brian Moynihan had told investors at the said conference to expect lower sales and trading revenue in comparison with the third quarter and the previous year. Figures for the quarter, however, were not made available for the presentation before the U.S. Goldman Sachs Financial Conference. Shares of Bank of America Corp (NYSE:BAC) declined as much as 2.1% after the announcement, recovering afterwards 1.7% at $17.35 per share on Tuesdays afternoon trading. It currently sells at $17.56 a share. Fixed-income trading has generally seen a decline since 2009 because of provisions that make banks veer away from unnecessary risks, affecting Wall Street firms including Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C).
On the other hand, Citigroup Inc (NYSE:C) fourth quarter position also braces for fall in profits attributed to an expected additional legal cost amounting to $2.7 billion, making the bank “marginally profitable”, according to CEO Mike Corbat. The currently faces regulatory investigation concerning foreign exchange, compliance with anti-money laundering provisions, and the setting of interest rates. Citigroup Inc (NYSE:C) is also setting aside an amount of $800 million to cover repositioning costs, as it is planning to boost profitability by retrenching staff, closing down bank branches, as well as backing out of small consumer businesses in some countries. According to Corbat, Citigroup is expecting a 5% decline in market revenue. Citigroup shares were down 2.4% at 54.99 in Tuesday’s trading.
Observers are wary about the industry, even as a number of large banks have backed down from trading operations, with some of them having quit the business for good.
This article has been written by Nonito Guntan.
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