US banking majors reported earnings yesterday:

  • Citigroup reported net income for the 3Q2021 of $4.6bn, up 48% YoY, driven by a lower credit costs, partially offset by the lower revenues and higher expense. Cost of credit was at -$192mn (a net benefit) vs. incurring $2.4bn in the prior year mainly due to a release of allowance for credit loss (ACL) reserves and an improvement in net credit losses. Citi released $1.16bn in loan loss provisions. FICC and Equity trading revenues were at at $3.18bn and $1.23bn respectively, beating estimates. Citigroup’s CET1 Capital ratio was 11.7%, down 7bp QoQ. Citi’s bonds were flat with its 5.95% Perps at 104.1, yielding 2.64%.
  • BofA reported net income of $7.7bn, up 58% YoY with net interest income (NII) up 10% to $11.1bn. Noninterest income up 14% to $11.7bn. Net profits were also helped by an improvement in provision for credit losses to a net benefit of $624mn, after reserve releases of $1.1bn driven primarily by ‘asset quality improvement’. Investment banking fees rose 23% to $2.2bn, while FICC and Equity trading revenues came at $2bn and $1.6bn, down 5% and up 33% YoY respectively. BofA also reported that deposit balances exceeded $1tnfor the first time, up 16% YoY. BofA’s CET1 Capital ratio was 11.1%, down 40bp QoQ. BofA’s bonds were slightly higher with its 5.125% Perps up 0.3 to 106.2, yielding 2.77%.
  • Morgan Stanley reported net income of $3.7bn, up 37% YoY. Provision for credit losses decreased from $111mn a year ago to $24mn. The firm posted record results in Investment Banking and Asset Management with revenues of $2.85bn and $3.63bn, up 28% and 30% YoY respectively. The company’s famous Wealth Management unit saw revenues jump 28% YoY to $5.94bn.  Meanwhile its Equities trading revenue jumped 24% YoY to $2.88bn, while its FICC revenue fell 16% to $1.64bn. MS’ CET1 ratio was 16%, down 70bp QoQ. MS’ bonds were stable with its 5.875% Perps at 114, yielding 2.8%.Wells Fargo also reported strong earnings, with profits up 59% YoY on the back of a release of $1.65bn in credit loss reserves . For the earnings release, click here

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