Magic Markets #158: Citigroup and Bank of America

Episode 158 January 17, 2024 00:25:58
Magic Markets #158: Citigroup and Bank of America
Magic Markets
Magic Markets #158: Citigroup and Bank of America

Jan 17 2024 | 00:25:58


Show Notes

This episode of Magic Markets is brought to you by data and process automation specialists B2IT. The company makes robots so that people don’t have to be robots. If you hate it, automate it by visiting the B2IT website.

With US earnings season underway and the most famous Wall Street banks having released results, we couldn’t resist digging into two such banks and the recent earnings. Instead of picking the obvious ongoing winner JPMorgan, we decided to delve into Bank of America and Citigroup instead.

At Bank of America, earnings are down sharply year-on-year. If you dig more deeply, you find that once-off charges plagued the numbers. We’ve seen this across several of the banks in this reporting cycle. There’s also been a negative impact from Bank of America having piled into long-dated securities during the pandemic. Time has proven this to be the wrong strategy. As part of his review of the results, Moe also dealt with credit loss provisioning and various other important metrics at the bank.

The Finance Ghost tackled Citigroup, where they can only dream of having positive earnings. It’s all about the restructuring process and a significant decrease in headcount. This makes for ugly headlines and pretty share price charts, at least over the past few months as the market started to get excited about the turnaround. Citigroup has been restructured into five business units and some of them are real laggards in the market. They have some excellent businesses as well, like the Treasury and Trade Solutions (TTS) operation that Citi is best known for. Thanks to the restructure, there’s now visibility on all of this.

And for a very unexpected conclusion, Ghost reckons that perhaps the best exposure you can take to financial services is by buying a technology company instead!

If you enjoy learning about the strategies used by global companies, then you’ll love Magic Markets Premium with a library of over 100 reports and podcasts with even more detail and depth. You can get access to all our work for just R99/month at this link.

Other Episodes

Episode 31

June 24, 2021 00:26:47
Episode Cover

Magic Markets #31: Yield Masterclass

Whether you trade bonds or not, the yield curve has an important impact on all the assets in your portfolio. Valuations of shares are...


Episode 76

May 18, 2022 00:30:36
Episode Cover

Magic Markets #76: Private Equity - there's more to investing

On the equity investment spectrum from venture capital at one end to public markets at the other, private equity occupies a vast area in...


Episode 89

August 17, 2022 00:24:01
Episode Cover

Magic Markets #89: Unwrapping our Research Process

In Magic Markets Premium, we’ve developed a research process that we apply every week in analysing global stocks. In this episode, we give you...