Citigroup’s (C) CFO John Gerspach spoke at a Deutsche Bank conference today and offering some insights into where the company is heading.
Bloomberg News In his comments, Gerspach said that Citi’s second-quarter trading revenue would drop by as much as 25% from a year ago, called loan demand “choppy,” and said that the banking giant’s “real goal” is to return more capital to shareholders.
Citigroup wasn’t the only bank making comments today. JPMorgan Chase (JPM) investment banking chief Daniel Pinto said marker revenue would be flat, while Bank of America (BAC) jumped after it said it had submitted a new capital-return plan to the Fed.
Nomura’s Bill Carcache thinks the return of excess capital by the bug banks will be “elusive:”
We think it may take years for banks to return the excess capital they hold today and expect excess capital accretion to continue over the near term, particularly with expected payout ratios around 50-80% for the 2014 CCAR period (2Q14-1Q15). In our view, getting the green light from regulators to pay out 100% of earnings will mark an important first step on the road to getting excess capital released. Most investors with whom we've spoken since our recent launch don't see that happening next year. At the earliest, we think it will take at least two years before the current generation of regulators allows some excess capital to leave the system. Even then, we believe the risk is high that a significant portion will remain trapped for a prolonged period. Uncertainty over when excess capital will be released makes us reluctant to give the banks full credit for it at this time.
Shares of Citigroup have gained 0.7% to $47.60 at 2pm today, while JPMorgan Chase has gained 1% to $55.07 and Bank of America has jumped 3% to $15.16.
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